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Directors Report of KPIT Technologies Ltd.

Mar 31, 2017

Dear Members,

The Directors are pleased to present the Twenty Sixth Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2017.

Performance of the Company

(In millions)

Particulars

Standalone 2016-17

Consolidated 2016-17

USD

USD

Revenue from operations

196.72

13,223.23

494.40

33,233.61

Profit before Tax (PBT)

29.49

1,982.44

44.50

2,991.17

Profit after Tax (PAT)

25.19

1,692.94

35.49

2,385.44

Result of Operations

During the year under review, the total revenues from operations (consolidated) increased to Rs, 33,233.61 million, a growth of 3% over the previous year. Earnings before interest, tax, depreciation and amortization was Rs, 3,747.19 million on consolidated basis. Net profit after tax (consolidated) decreased by 15.08% to Rs, 2,385.44 million.

In US Dollar terms, revenues from operations for the year on consolidated basis was Rs, 494.40 million as against Rs, 490.31 million during the previous year, a growth of 0.83%. Average realization rate was Rs, 67.22 per US Dollar.

Standalone sales for the financial year 2016-17 grew by 4.61 % to reach Rs, 13,223.23 million. Net profit after tax decreased by 16.67% to Rs, 1,692.94 million.

Dividend

The Directors are pleased to recommend a final dividend of Rs, 2.20/- per equity share of face value of Rs, 2/- each (110%)on the paid-up equity share capital of the Company for the year under review. The total pay-out will amount to Rs, 522.95 million including dividend distribution tax.

Share Capital

The issued, subscribed and paid-up capital of the Company as on March 31, 2017 is Rs, 394.99 million, consisting of 197,498,742 equity shares of Rs, 2/- each.

CRISIL Ratings

For the bank loan limits of Rs, 4,445.50 million, CRISIL has assigned the long term credit rating of AA-/ Negative.

Quality and Information Security

Our focus on quality and innovation has helped us deliver increased value to our customers. We continue to focus on strengthening our commitment to quality by sustaining and increasing the scope of our existing certifications. During the year under review, the Company has successfully completed surveillance audit of ISO 9001:2008 (Quality Management Systems).

We also continue to maintain certifications for ISO 27001:2013 (Information Security Management Systems) and ISO 22301:2012 (Business Continuity Management). We have successfully completed our surveillance audits for the above two certifications in this year. The Company continues to maintain the highest level of process maturity at Level 5 for CMMI-DEV® V1.3 (Development) and the Automotive SPICE ® organization maturity Level 5.

Our customers and market place are changing at an unprecedented speed and it is imperative for the Company to align with the changes in the market by utilizing tools and governance mechanisms which can adapt and facilitate change with ease. Keeping this in mind, we have adopted industry leading project management tool which has enhanced features like mobile support, custom workflow definition and Agile support apart from being a platform for aggregating information and data to offer consolidated engineering analytics. We also continue to strengthen its Business IT delivery through focus on automation levers across SBUs and Practices.

Productivity

To enhance productivity, a key initiative has been taken to create a RAD (Rapid Application Development) Framework -named FoundationK, which has been developed to address the need of the market which is trending towards Agile, rapid go to market and achieve significant not just incremental productivity improvements. This is Transformational and Disruptive application development framework which has equipped our developers to build Scalable, Secure, High Performance, Reliable, Responsive UI and Multilingual application with a framework which has fundamental components available eliminating the effort to develop from scratch. This has provided significant improvement in productivity, greater reduction in time to market and significant code quality improvement leading to enhanced customer satisfaction.

Our process improvement drive continues to be strengthened by leveraging workflow optimization, six sigma and lean principles. We are committed to support the dynamic business needs of our customers through continuous focus on operational and quality excellence.

Institutional Shareholding

As on March 31, 2017, the total Institutional shareholding in the Company was 54.30% of the total share capital.

Information about the Subsidiary Companies

As on March 31, 2017, the Company had 15 subsidiaries, including step-down subsidiaries.

During the year under review, KPIT medini Technologies AG was sold to ANSYS Germany GmbH on November 2, 2016. Also MicroFuzzy Industrie - Elektronic GmbH, a German based company was acquired through KPIT Technologies GmbH, effective November 30, 2016.

In accordance with Section 129(3) of the Companies Act, 2013, (hereinafter referred to as "the Act") the Company has prepared consolidated financial statements of the Company and all its subsidiary companies, which forms a part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies in Form AOC-

1 is annexed to this Report as "Annexure 1".

In accordance with Section 136(1) of the Act, the Annual Report of the Company, containing the standalone and the consolidated financial statements and all other documents required to be attached thereto have been placed on the website of the Company, www.kpit.com. Further, a report on the highlights of performance of subsidiaries and their contribution to the overall performance of the Company has also been placed on the website of the Company. Members interested in obtaining a printed copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company''s registered office.

Directors

During the year, Mr. Sachin Tikekar, Whole-time Director of the Company was re-appointed for a period of 5 years w.e.f October 20, 2016.

In accordance with Section 152 of the Act, Mr. S. B. (Ravi) Pandit retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Ms. Lila Poonawalla, Dr. R. A. Mashelkar, Mr. Adi Engineer, Prof Alberto Sangiovanni Vincentelli were appointed as Additional & Independent Directors for a period of 5 years w.e.f April 1, 2017, subject to approval of the shareholders. The proposal for the same is being made to the shareholders for their approval at the forthcoming Annual General Meeting.

Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Act, read with the Rules framed there under:

1. Mr. Kishor Patil - Chief Executive Officer (CEO) and Managing Director;

2. Mr. Anil Patwardhan - Chief Financial Officer (CFO);

3. Ms. Sneha Padve - Company Secretary.

Auditors

Pursuant to the provisions of Section 139(1) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company in the Annual General Meeting held on July 25, 2014 for a period of five years, subject to ratification by the members in every Annual General Meeting. Based on the recommendation of the Audit Committee, the Board recommends ratification of the appointment of B S R & Co. LLP, as the Statutory Auditors of the Company, at the ensuing Annual General Meeting.

The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The report does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, as the Secretarial Auditor to conduct audit for the year under review. The Secretarial Auditor''s report for the year under review is annexed to this Report as "Annexure 2". The report does not contain any qualification, reservation or adverse remark.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon forms a part of this Report. The Auditors'' Certificate in respect of compliance with the provisions concerning Corporate Governance, forms a part of this Annual Report, as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "the SEBI (LODR) Regulations, 2015").

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Awards & Recognition

- KPIT''s Electric Bus technology, Revolo, selected as a Finalist for United Nation''s Energy Grant for sustainable development;

- KPIT recognized as a "Challenger" in Gartner''s 2017 Magic Quadrant for SAP Application Services, North America;

- KPIT Won "Newcomer of the Year" Award at Annual SAP Hybris Summit;

- Ms. Vaishali Vaid, VP & Head - Global HR, was recognized as the ''Most influential HR leaders in India'' by the World HRD Congress and also recognized with the Women Leadership Achievement Awards at the 4th World Women Leadership Congress & Awards (WWLCA);

- KPIT''s community driven water conservation project received jury award by FICCI;

- KPIT bags ''Order of Merit'' awards for its ITS at the Businessworld Smart Cities Conclave & Awards;

- KPIT wins Oracle Excellence Award for Specialized Partner of the Year - North America in Mobility Category;

- IDC names KPIT Worldwide leader in delivering SAP Business Suite Powered by SAP HANA.

Particulars of Employees

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of '' 1 crore 2 lakhs or more, or employed for part of the year and in receipt of '' 8.5 lakh or more a month, and other employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as "Annexure 3(a)".

The ratio of the remuneration of each director to the median employee''s remuneration and other details prescribed in Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed to this Report as "Annexure 3(b)".

Employees Stock Option Plan (ESOPs)

Information relating to ESOPs of the Company is annexed to this Report as "Annexure 4". The information is being provided in compliance with Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013

The Company has in place a policy on prevention of sexual harassment and has put in place a redressal mechanism for resolving complaints received with respect to sexual harassment and discriminatory employment practices for all genders. One case of sexual harassment was reported and due diligence was followed as part of the process. The case was closed post investigation by the internal committee.

Fixed Deposits

The Company has not accepted any deposits as on March 31, 2017.

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014

Conservation of Energy

The Company always endeavors to reduce energy consumption and achieve conservation of resources. Many initiatives taken in this connection have been detailed in the previous Board''s Reports which the Company continues to implement. Apart from those initiatives, the following PAN India measures were undertaken to reduce energy consumption resulting in Pune (30%), Bangalore (15%) and Mumbai (19%) saving over the period of 6 years. Few initiatives undertaken in FY16-17 are listed below:

- Replaced 500 CFLs (56W) with energy efficient LED lights (20W), resulting in energy saving of 45000 KWH units per annum.

- Roof top PV solar cell installed at Pune capacity of 125 KW in December 2016, which is generating average 500 - 600 KWH units per day. This is expected to generate 200,000 KWH units annually.

- Energy Efficient VRF HVAC system installed at new facility at Mahape which has resulted in 25% energy savings. The average savings expected is 700 units per day.

Green Initiatives

KPIT is committed towards giving our future generations a

sustainable world through efficiency in our business operations

and conservation of natural resources. Highlights from 201617 include:

- 3 rain water harvesting farm ponds created / desilted in Alladahalli (Nelmangala Taluka), Karnataka and Ranza (Shivapur) Village, Maharashtra.

- Well excavation & construction at Guhini & Metpilawar Village, District Pune resulting in a capacity to store 2.5 million litres of water.

- Widening and deepening of water canal at Wajeghar Village, District Pune, creating a water reservoir of 10 million litres of capacity.

- Soil Dam at Varoti & Pasali, District Pune, with a capacity to conserve 8 million litres ofwater.

- Cement Nala Bund (CNB) at Shelgaon Village, District Osmanabad, enabling a water corridor of 22m x 600m x 2m. This will result in a storage of 16 million litres of water.

- Afforestation efforts led to planting of saplings at Bengaluru and Pune locations, with an overall survival rate of 80 percent.

- As a part of Zero Garbage project, in association with Janwani, Pune - a total of 1,069 awareness programs have been conducted across Pune city.

- Since 2010, we have been celebrating the Environment Week on the occasion of "World Environment Day". In the year 2016-17, Environment Week was celebrated from June 1 to June 6, at all our locations in India.

- Mr. Ravi Pandit has been nominated as a National expert on ''Technology Evaluation Committee for Solid & Liquid Waste and Water Supply''.

Occupational Health and Safety Assessment Series (OHSAS)

The following activities were carried out by the Company under

OHSAS in 2016-17:

- Framework created to move away from a week of health and wellness to annual approach for "Health and Wellness";

- Choice of workout provided considering the popularity and trendy ways of exercise:

o IntroductionofZumba

o Introduction of Yoga

- Health check-ups & diagnostic support to employees and their families:

o Subsidized health check-up package offered for employee family

o Negotiated discounts on expensive tests for employee family

- Initiated hospital tie ups for discounted check-ups for OPD and other tests (addition to diagnostic centers);

- Awareness Communication on "World Health Organization (WHO) Days";

- Engagement Through Wellness: o Laughter sessions

- Special Pranayama sessions for International Yoga Day

- Tug of War

- Random blood sugar testing on World Diabetes Day o Dental check-up camps

- Eye check-up camps on campus for employees

- Meditation activity conducted as a mark of "Healthy Mind"

- Balloon blowing activity on the World Heart Day

- Awareness session linked to the WHO days

- Awareness sessions exclusively on alternate therapies Technology Absorption

This year, we took a goal of improving the organizational productivity and enhanced end user experience. In pursuit of this goal, we have undertaken a strategic initiative called ''Simplificar'' which aims for process standardization, simplification and actionable business insights spanning organization wide business processes. SAP S/4 Hana has been chosen as the ERP application and will be the mainstay of the "System of Records". We have also initiated the development of ''Next Generation Engagement Systems'' which will integrate with the System of Records. The constituents of the ''Engagement systems'' are being developed using the Agile application development methodology. The engagement systems that are being designed, leverage various cognitive technologies that will improve user experience on one hand and pursue process optimization on the other. Some key features of the ''Engagement System'' include responsive UX, Device Agnostic UI, highly personalized Context and Persona based content delivery that gives proactive insights which would improve ''In the moment effectiveness''. This will be a true blue "conversational system" with a focus on ''Experience first!''

Last year, we also rolled out an initiative to implement integrated collaboration platform using Cisco''s WebEx technology. This has led to substantial cost reductions vis a vis traditional audio conferencing services while providing a seamless meeting experience that is greatly enhanced by features like ''one touch audio / video calling'' from any device, application and presentation sharing, personalised meeting rooms for relevant users, meeting recording and sharing etc. We also invested substantially in securing our infrastructure against cyber security threats. The implementation of the Next Generation Firewall and Wildfire platforms from Palo Alto Networks are major steps taken in this direction and have helped in securing business applications and infrastructure from advance threats. In the same vein, we have also implemented ''TRAPs'' from Palo Alto networks for Advance Threat Protection solutions on end points. This solution protects end user devices against Advance Malwares and Exploits. All these preventive security technologies have led to us running a ''Zero Incident'' infrastructure in the last year.

We focused not only digitizing IT infrastructure but also invested in making the campus infrastructure ''Smart''. Using our Smart Campus platform, last year we rolled out many applications like Smart Parking that uses automatic number plate recognition technologies, Smart Cafeteria uses location aware solution, provides online ordering of food and uses e-payments. Our Smart Asset Management application provides real time inventory of all the assets while the Smart Incident Management application helps our employees initiate a ''one click'' reporting of incidents by scanning the QR codes designated to common areas. These apps have improved employee experience and productivity. We are also in process of digitizing all campus infrastructure like HVAC, CCTV, pumps, water level controllers, elevators, power meters, D.G sets, access control etc. and bringing real time insights on our campus platform.

Next year, we aim to focus on setting up Digital Labs and a Centre of Excellence (CoE) that will showcase transformational use cases using digital technologies. The CoE would enable our customers to co-innovate with us using the lab infrastructure. We have realized the important role of digital technology on every business unit / function and our customers. We are focusing on creating ''Think Digital'' culture and initiating steps towards propagation of digital skills across the organization.

Research and Development (R&D) Activity We have received an "Order of Merit" Award at the Business world Smart Cities Conclave & Awards for its Intelligent Transport System - A solution that enables higher ridership in buses by making it safer, smarter and more efficient. Business world Smart Cities Conclave & Awards is a platform that recognizes the solutions that address problems posed by rapid urbanization in the domain of transportation for the cities.

KPIT''s innovative and indigenous electric bus technology -Revolo was featured in the UN ''Energy Grant'' list.

KPIT was nominated among 8 finalists from 157 international applicants for the prestigious 2016 UN-DESA (United Nations Department of Economic and Social Affairs) Grant on Energy, themed around ''Energy for Sustainable Transport.'' KPIT was recognized with a ''Certificate of Appreciation'' for its indigenous electric bus technology — Revolo — that enables clean urban mobility.

KPIT was invited to the United Nations HQ in New York, on December 14, 2016, for a special event organized by the secretariat entity.

We bagged the ''Promising Transport Innovation Award'' at the International Transport Forum (ITF) 2016 Summit in Leipzig, Germany. KPIT won the award for its technology ''REVOLO'' that enables clean urban mobility.

The ITF Promising Transport Innovation Award recognizes innovations that have the potential to significantly improve the quality, performance, user experience, accessibility, sustainability or inter-modality of the transport. It is instituted by ITF, an inter-governmental organization which acts as a think tank for transport policy with 57 member nations.

REVOLO is a versatile system, designed to work across different bus formats. The key components of the system are lithium ion batteries, electric motors, a power transmission unit and smart electronic control units. The Smart Electric buses have multiple features like Intelligent Transport Systems, Mobile Phone App for journey planning and ticketing, Wi-Fi Infotainment etc. which provide a superior ride experience that can help encourage adoption of public transport.

A separate section on R & D activities forms a part of this Annual Report.

The total amount spent on R&D activities is given below: R&D expenses for the year ended March 31, 2017

Particulars

Amount (Rs, in millions)

Key Project Details

Expensed in the statement of Profit and Loss (Refer Note 1)

188.53

Solar,Bus_Program (HEV), ITS Eng, Innovation

Capital work-in-progress

230.22

ADAS, Autosar, K-SAR, BUS, CREST, Power train

Assets capitalized during the year

38.69

Total

457.44

Notes:

1. Out of total R & D expenditure of Rs, 188.53 million, eligible R&D revenue expenditure under Section 35(2AB) of the Income Tax Act, 1961, for the Company is Rs, 125.61 million.

Foreign Exchange Earnings and Outgo

Given the global nature of the business of the Company, exports always form its thrust. Total foreign exchange earnings during the year have been Rs, 9,586.28 million (previous year'' 9,900.37 million) and foreign exchange outgo (including imports) has been '' 324.53 million (previous year'' 688.24 million).

Board Meetings

Six meetings of the Board of Directors were held during the year. More details about the meetings are available in the Report on Corporate Governance, which forms a part of this Annual Report.

Committees of Board

The details regarding Committees of the Board of Directors of the Company are given in the report on Corporate Governance, which forms a part of this Annual Report.

Independence of the Board

The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of theAct:

Sr.

No.

Name of the subsidiary

Nature of transaction

Duration

Rate of Interest

(%)

Amount (Rs, in million)

Purpose

1

KPIT Technologies (UK) Limited

Guarantee

Till April 30, 2017

NA

80.88

For setting up the credit facilities

2

Impact Automotive Solutions Limited

Acquisition

NA

NA

500.10

Equity infusion

1. Ms. Lila Poonawalla

2. Dr. R. A. Mashelkar

3. Mr. Adi Engineer

4. Prof. Alberto Sangiovanni Vincentelli

5. Mr. Anant Talaulicar

Company''s Policy on Directors'' appointment and remuneration

Pursuant to the provisions of Section 134(3)(e) of the Act, the policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Act is annexed to this Report as "Annexure 5".

Particulars of loans, guarantees or investments under Section 186 of the Act

Particulars of loans, guarantees or investments made during the year under review, pursuant to the provisions of Section 186 of the Act are as below:

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act

Pursuant to the provisions of Section 134(3)(h) of the Act, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act and prescribed in Form AOC-2 of Companies (Accounts) Rules, 2014, is annexed to this Report as "Annexure 6".

Material changes and commitments affecting the financial position of the Company

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

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Risk Management Policy

A mechanism to identify, assess, monitor and mitigate various risks to key business objectives of the Company is in place. A write-up on Enterprise Risk Management is included in this Annual Report.

Internal Control Systems and Adequacy of Internal Financial Controls

The internal control systems of the Company are adequate considering the nature of its business, size and complexity. The Statutory Auditors as well as the Internal Auditors of the Company review the same on periodical basis. Further, significant observations, if any, and action taken reports on the same are considered by Audit Committee at their meeting.

The Act has made it mandatory for the Directors in their Responsibility Statement in the Board''s Report to state that "the directors, in the case of a listed company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating "effectively". The above statement has to be affirmed to by the Statutory Auditors in their Audit Report.

As per explanation provided to Section 134(5)(e) of the Act, "internal financial controls" means "the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information".

Components of internal control define internal control over financial reporting as a process designed by, or under the supervision of CEO and CFO office and effected and approved by the Board of Directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Indian Accounting Standard (IND-AS) and includes those policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets and liabilities of the Company;

- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IND-AS and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company''s assets that could have a material effect on the financial statements.

Audit Committee Recommendations

During the year, all the recommendations of the Audit Committee were accepted by the Board. The composition of the Audit Committee is as mentioned in the Report on Corporate Governance, which forms a part of this Annual Report.

Corporate Social Responsibility (CSR)

The Policy on Corporate Social Responsibility of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as "Annexure 7".

Formal Annual Evaluation by the Board

A separate meeting of the Independent Directors of the Company was held on February 17, 2017, in which a formal evaluation of performance of the Board, Committees and the individual Directors was carried out. The performance evaluation was conducted based on the criteria specified in the Act, Regulation 17 of the SEBI (LODR) Regulations, 2015 and Guidance Note on Board Evaluation issued by SEBI.

The feedback based on evaluation was discussed with the Chairman of the Board and given to the Directors.

Vigil mechanism

The Company has established a vigil mechanism as per Regulation 22 of the SEBI (LODR) Regulations, 2015 for Directors and employees to report their genuine concerns. The details of the same are explained in the Report on Corporate Governance. The Policy on Vigil Mechanism may be accessed on the Company''s website at the link: (http://www.kpit.com/ company/investors/corporate-governance).

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed to this Report as "Annexure 8".

Responsibility Statement of the Board of Directors

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors state that:

i) in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended March 31, 2017;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual financial statements have been prepared on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

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

CEO& CFO Certification

Certificate by Mr. Kishor Patil, CEO & Managing Director and Mr. Anil Patwardhan, Chief Financial Officer, pursuant to the provisions of Regulation 17(8) of the SEBI (LODR) Regulations, 2015, for the year under review was placed before the Board of Directors of the Company at its meeting held on April 26, 2017.

A copy of such certificate forms a part of the Report on Corporate Governance.

Acknowledgments

We take this opportunity to thank all the shareholders of the Company for their continued support.

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 further thank the governments of various countries where we have our operations. We also 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, the Software Development Centers (SDCs) / Special Economic Zones (SEZs) - Navi Mumbai, Chennai, Bengaluru, Hyderabad, Noida, Pune and all other government agencies for their support and look forward for their continued support in future.

For and on behalf of the Board of Directors

Pune S. B. (Ravi) Pandit

April 26, 2017 Chairman & Group CEO


Mar 31, 2016

Dear Members,

The Directors are pleased to present the Twenty Fifth Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2016.

Performance of the Company

(In million)

Particulars Standalone 2015-16 Consolidated 2015-16

USD Rs. USD Rs.

Revenue from operations 191.89 12,618.56 490.31 32,242.91

Profit before Tax (PBT) 37.45 2,462.76 55.42 3,64467

Profit after Tax (PAT) 30.70 2,019.14 42.81 2,815.00

Result of Operations

During the year under review, the total revenues from operations (consolidated) increased to Rs. 32,242.91 million, a growth of 7.84% over the previous year. Earnings before interest, tax, depreciation and amortization was Rs. 4,240.15 million on consolidated basis. Net profit after tax (consolidated) increased by 18.78% to Rs. 2,815 million.

In US Dollar terms, revenues from operations for the year on consolidated basis was Rs. 490.31 million as against Rs. 489.03 million during the previous year, a growth of 0.26%. Average realization rate was Rs. 65.76 per US Dollar.

Standalone sales for the financial year 2015-16 grew by 1.29% to reach Rs. 12,618.56 million. Net profit after tax increased by 32.80 % to Rs. 2,019.14 million.

Dividend

The Directors are pleased to inform that in FY2015-16 an interim dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) was decleared and paid by passing a circular Board resolution dated March 31, 2016.

Futher, the Board recommends a final dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) on the paid-up equity share capital of the Company for the year under review. The total pay-out will amount to Rs. 262.66 million including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer Rs. 202.00 million to the General Reserve. An amount of Rs. 7,050.81 million is proposed to be retained in the Profit & Loss Account.

Share Capital

The Company issued and allotted 732,629 equity shares of Rs. 2/- each, to the eligible employees on exercise of options under the Employee Stock Option Schemes of the Company and 104,000 shares have been allotted to KPIT Technologies Employees Welfare Trust during the financial year 2015-16.

Consequently, the outstanding issued, subscribed and paid- up capital of the Company as on March 31, 2016, is Rs. 394.99 million, consisting of 197,498,742 equity shares of Rs. 2/- each.

CRISIL Ratings

For the bank loan limits of Rs. 4,445.50 million, CRISIL has assigned the long term credit rating of AA-/ Negative.

Quality, Information Security and Productivity

We continue to strengthen our commitment to quality by sustaining and increasing the scope of the existing certifications. During the year under review, the Company achieved recertification for ISO 9001:2008 (Quality Management Systems), ISO 20000-1:2011 (Information Technology Service Management) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. We also continue to maintain certifications for ISO 27001:2013 (Information Security Management Systems) and IS022301:2012 (Business Continuity Management). The Company continues to maintain the highest maturity level 5 for CMMI-DEV® v1.3 (Development) and the Automotive SPICE® organization maturity level 5 upgraded from v2.5 to v3.0 during the year under review.

Our Customers and the market place are changing at an unprecedented speed and it is imperative to have robust tools and governance mechanisms which can adapt and facilitate change with ease. Keeping this in mind, we have developed Klarity, a platform for aggregating information and data from various tools within the organization to offer consolidated engineering analytics. The Company also continues to strengthen its Business IT delivery through focus on automation levers across SBUs and Practices. The ERP practice harnesses the power of the tools and accelerators developed in-house via a cloud based solution to utilize these individual tools in the form of an end-to- end tool chain.

Our process improvement drive continues to be strengthened by leveraging on workflow optimization, six sigma and lean principles. The Products and Platforms SBU now leverages on Agile methodology for faster time to market as well as cohesive communication amongst the product development stakeholders. We are committed to support the dynamic business needs of our customers through continuous focus on operational and quality excellence.

Institutional Shareholding

As on March 31, 2016, the total Institutional shareholding in the Company was 51.61% of the total share capital.

Information about the Subsidiary Companies

As on March 31, 2016, the Company had 15 subsidiaries, including step-down subsidiaries.

During the year under review, Integrated Industrial Information, Inc. and CPG Solutions, LLC were merged with KPIT Infosystems Incorporated, USA, with effect from January 01, 2016.

In accordance with Section 129(3) of the Companies Act, 2013, (hereinafter referred to as "the Act") the Company has prepared consolidated financial statements of the Company and all its subsidiary companies, which is forming part of this Annual Report. A statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is annexed to this Report as "Annexure 1".

In accordance with Section 136(1) of the Act, the Annual Report of the Company, containing the standalone and the consolidated financial statements and all other documents required to be attached thereto have been placed on the website of the Company, www.kpit.com. Further, a report on the performance and financial position of each of the subsidiaries has also been placed on the website of the Company. Members interested in obtaining a printed copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company''s Registered Office.

Directors

Pursuant to Section 152 of the Act, Mr. B V R Subbu retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

During the year, Mr. Dwayne Allen, Alternate Director to Mr. Anant Talaulicar, Independent Director, resigned from the directorship effective March 12, 2016, owing to his other business commitments and pre-occupations.

The Board places on record its appreciation of the valuable services provided by Mr. Dwayne Allen during his tenure as a Director.

Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Act, read with the Rules framed thereunder:

1. Mr. Kishor Patil- Chief Executive Officer (CEO) and Managing Director;

2. Mr. Anil Patwardhan- Chief Financial Officer (CFO);

3. Ms. Sneha Padve- Company Secretary.

Ms. Sneha Padve has been appointed as the Company Secretary and Compliance Officer of the Company, effective July 22, 2015, consequent upon Mr. R. Swaminathan moving into a new business role within the Company and getting relieved from the role of the Company Secretary and Compliance Officer.

Auditors

Pursuant to the provisions of the Act, read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company in the Annual General Meeting held on July 25, 2014 for a period of five years, subject to ratification by the members in every Annual General Meeting. Based on the recommendation of the Audit Committee, the Board recommends ratification of the appointment of B S R & Co. LLP, as the Statutory Auditors of the Company, at the ensuing Annual General Meeting.

The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, as the Secretarial Auditor to conduct audit for the year under review. The Secretarial Auditor''s report for the year under review is annexed to this Report as "Annexure 2". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon forms a part of this Report. The Auditors'' Certificate in respect of compliance with the provisions concerning Corporate Governance, forms a part of this Annual Report, as required under the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "the SEBI (LODR) Regulations, 2015").

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Awards & Recognition

- KPIT''s Smart Electric Bus technology wins the "One Globe Award for Excellence in Research & Development";

- KPIT Featured as a "Niche Player" in Gartner''s 2015 "Magic Quadrant for Oracle Application Management Services, Worldwide";

- KPIT Won "Newcomer of the Year" Award at Annual SAP Hybris Summit;

- KPIT''s solution for Consul Neowatt Power Solutions wins SAP ACE Award for Customer Excellence in Service;

KPIT was honored for Successful Digital Transformation with ''Jewels of Digital Maestro Award'';

- KPIT was conferred with the Most Influential Marketing Leaders Awards;

- Ms. Vaishali Vaid, VP & Head - Global HR, was honored with the ''100 Most Talented Global HR Leaders Award'' by CHRO Asia for the second time in a row;

- KPIT was honored with the ''Best CSR Practice Award'' by the World CSR Congress.

Particulars of Employees

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as "Annexure 3(a)".

The ratio of the remuneration of each Director to the median employee''s remuneration and other details prescribed in Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed to this Report as "Annexure 3(b)".

Employees Stock Option Plans (ESOPs)

Information relating to ESOPs of the Company is annexed to this Report as "Annexure 4". The information is being provided in compliance with Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a policy on prevention of sexual harassment and has put in place a redressal mechanism for resolving complaints received with respect to sexual harassment and discriminatory employment practices. No case of sexual harassment and discriminatory employment was reported during the financial year under review.

Fixed Deposits

The Company has not accepted any deposits and as such, no amount of principal or interest was outstanding as on March 31, 2016.

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014

Conservation of Energy

The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection have been detailed in the previous years'' Board''s Reports which the Company continues to implement. Apart from those initiatives, the following PAN India measures were undertaken to reduce energy consumption resulting in Pune (30%), Bangalore (15%) and Mumbai (19%) saving over the period of 6 years.

Replaced 300 CFLs (72W) with energy efficient LED lights (36W), resulting in energy saving of 2,750kwh units per month amounting to Rs. 2.00 lacs;

- Replaced UPS with higher energy efficiency thereby reduction in energy consumption by 10%, for which capital invested was Rs. 34 lacs;

- Mild-concentrated Solar Photovoltaic Technology: We have developed a low-cost and light weight concentrator, which can concentrate up to 3-5 times the light that is incident on it.

Green Initiatives

The following initiatives were undertaken at the Company level to create awareness about importance of environmental protection and reducing pollution:

- 50 trees saplings have been planted within the Company premises in the month of June 2015;

247 Computer Assets and 300 CFL lights sent for recycling in the month of October 2015;

- 1,200 acres of agricultural land under irrigation, benefiting 21,000 people from 7 villages;

Covered 2 villages under Government of Maharashtra''s Jalyukta Shivar Abhiyan;

- KPITes spread awareness about the Zero Garbage initiative;

Environment Week Celebration: We have been celebrating the Environment Week on the occasion of the "World Environment Day" for the past six years since 2010;

Conservation of Private Forests in Koyna - Chandoli Corridor in Maharashtra;

Tree Plantation Programs: 1,050 trees planted in Pune & Bangalore.

Occupational Health and Safety Assessment Series (OHSAS)

The following activities were carried out by the Company under OHSAS in 2015-16:

Framework created to move away from a week of health and wellness to annual approach for "Health and Wellness";

Following choice of work out provided considering the popularity and trendy ways of exercise:

- Introduction of Zumba

- Introduction of Yoga

Following health check-ups & diagnostic support to employees and their families:

- Subsidized health check-up package offered for employee family

- Negotiated discounts on expensive tests for employee family

Health awareness vaccination drives to address health hazards such as:

- H1N1 Vaccination drive done for employee family

Initiated hospital tie ups for discounted check-ups for OPD and other tests (addition to diagnostic centers);

- Awareness Communication on "WHO Days";

- Engagement Through Wellness:

- Laughter sessions

- Special Pranayama sessions for International Yoga Day

- Tug of War

- Random blood sugar testing on World Diabetes Day

- Dental check-up camps

- Eye check-up camps on campus for employees

- Meditation activity conducted as a mark of "Healthy Mind"

- Balloon blowing activity on the World Heart Day

Technology Absorption

During the year under review, we have taken Smart Enterprise initiative to digitally transform key business processes creating differentiated experiences for everyone interacting with us and also improve people productivity. We have successfully deployed Pivotal Cloud Foundry a KPIT digital platform hosted on Smart Infrastructure. Various productivity mobile apps are made available to employees using the Company''s store hosted on Microsoft Intune platform.

Smart Infrastructure consists of software defined Data Centre technologies comprising of integrated self-service software defined compute, network and storage improving agility and governance for IT asset provisioning. This year, we also rolled out KPITube.com, a video gallery for our employees to collaborate and share videos and access live sessions using any smart devices. To take the collaboration experience to next level and allowing employees to participate in audio/video conference from any place, any device, we are rolling out ''WebEx'' to global users.

In addition to the above, following are the key initiatives planned in the coming year:

Transforming IT with ''IT as a Service'' focusing on business value than technology;

- Implementing context aware smart business applications with mobile first, cloud first, platform enabled architecture;

Digital Engagement Hub: Global integrated Omni- channel Service Desk for all enabling functions.

Research and Development (R&D) Activity

EV bus project

Hon''ble Prime Minister of India Shri Narendra Modi flagged off the Smart Electric Bus, an indigenous technology developed by our Company, at the Indian Parliament on the December 21, 2015. This project was initiated by Shri Nitin Gadkari, Hon''ble Minister of Road Transport and Highways (MoRTH), Government of India.

The Central Institute of Road Transport (CIRT) supported this project to validate and ensure that the electric bus technology is safe, reliable and well suited for Indian road conditions. This initiative is inspired by Shri Nitin Gadkari''s call to the industry and research organizations to develop indigenous, innovative and pollution free public transport for India. Our Smart Electric Bus enables clean mobility and is aligned with the Indian government''s initiatives of Make in India, Smart Cities and Swachh Bharat.

The indigenously developed electric system, with the intellectual property rights being owned by us, consists of components like motors, lithium ion batteries and a power transmission unit. It is a versatile system and features like range (100 to 200 km), top speed (up to 100 kmph), air conditioning, etc. can be configured as required. This system is being designed to work in all bus formats, i.e. front engine and rear engine, high floor and low floor etc.

Major benefits from this technology would be:

1. Zero emissions

2. Increased passenger comfort

3. Low maintenance

4. Versatile design to meet customer requirement

Replacing one diesel bus with an electric bus can save carbon dioxide emissions up to 48,000 kg a year which is equal to planting 2,400 trees annually. It will also save diesel worth Rs. 10 lacs a year.

Hybrid bus

We received an award from the Indian Automotive Technology and Innovation Awards (IATIA) titled "Technology innovation of the year 2015" for hybrid conversion technology.

Currently, we are running hybrid pilot buses along with some of the transportation undertakings to collect data and results about the performance.

The total amount spent on R&D activities is given below:

R&D expenses for the year ended March 31, 2016

Particulars Amount Key Project Details (Rs. in million)

Expensed in the - CREST Projects

Statement of - its engineering

Profit and Loss

- Revolo Bus

(Refer Note 2) 92.34

- Solar

- Smart traffic monitoring

- Data science and analytics

Capital work-in- 204.76 Autosar, BUS hybrid, progress K-SAR

Assets capitalized 31.53 Linux during the year

Total 328.63

Notes:

1. During the previous year, the Company had set up a state-of-the-art facility for its R & D activities, construction of which is completed as of March 31, 2015. The Company has been granted recognition of this of facility with the Department of Science & Industrial Research which is valid up to March 31, 2018.

2. Out of total R & D expenditure of Rs. 92.34 million, eligible R & D revenue expenditure under Section 35(2AB) of the Income Tax Act, 1961, for the Company is Rs. 78.00 million.

A separate section on R&D activities undertaken by the Company has also been included in this Annual Report.

Foreign Exchange Earnings and Outgo

Given the global nature of the business of the Company, exports always form its thrust total foreign exchange earnings during the year have been Rs. 9,900.37 million (previous year Rs. 8,783.50 million) and foreign exchange outgo (including imports) has been Rs. 688.24 million (previous year Rs. 589.13 million).

Board Meetings

Six meetings of the Board of Directors were held during the year. More details about the meetings are available in the Report on Corporate Governance, which forms a part of this Annual Report.

Committees of Board

The details regarding Committees of the Board of Directors of the Company are given in the report on Corporate Governance, which forms a part of this Annual Report.

Independence of the Board

The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of the Act:

1. Ms. Lila Poonawalla

2. Dr. R. A. Mashelkar

3. Mr. Adi Engineer

4. Prof. Alberto Sangiovanni Vincentelli

5. Mr. Anant Talaulicar

Company''s Policy on Directors'' appointment and remuneration

Pursuant to the provisions of Section 134(3)(e) of the Act, the policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3), of the Act is annexed to this Report as "Annexure 5".

Particulars of loans, guarantees or investments under Section 186 of the Act

Particulars of loans, guarantees or investments made during the year under review, pursuant to the provisions of Section 186 of the Act are as below:

Sr. Name of the subsidiary Nature of Duration Rate of No. Transaction Interest (%)

1. KPIT Technologies (UK) Guarantee Till April 30, 2016 NA Limited

2. Impact Automotive Acquisition NA NA SolutionsLimited

3. KPIT (Shanghai) Acquisition NA NA Software Technology Co.,Limited

4. KPIT Technologies Loan NA 7.55% Employees Welfare Trust

5. KPIT Infosystems Guarantee Till July 31, 2020 NA Incorporated

6. KPIT Infosystems ME FZE Guarantee Till December NA 31,2016

7. Mr. Kishor Patil Loan Till December 7.60% 31,2020

Sr. No. Name of the subsidiary Amount Purpose (Rs. in million)

1. KPIT Technologies (UK) Limited 95.09 For setting up the credit facilities

2. Impact Automotive Solutions Limited 181.80 Equity infusion

3. KIPT (Shanghai Software Technology Co., Limited 32.01 Equity infusion

4. KIPT Technologies Employees Welfare Trust 150.00 For operation of Employee Stock Option Plans

5. KPIT Infosystems Incorporated 663.33 For setting up the credit facilities

6. KPIT Infosystems ME FZE 66.33 For setting up the credit facilities

7. Mr.Kishor Patil 30.00 Housing loan under loan policy of the Company

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act

Pursuant to the provisions of Section 134(3)(h) of the Act, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act and prescribed in Form AOC-2 of Companies (Accounts) Rules, 2014, is annexed to this Report as "Annexure 6".

Material changes and commitments affecting the financial position of the Company

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

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Risk Management Policy

A mechanism to identify, assess, monitor and mitigate various risks to key business objectives of the Company is in place. A write-up on enterprise risk management is included elsewhere in this Annual Report.

Internal Control Systems and Adequacy of Internal Financial Controls

The internal control systems of the Company are adequate considering the nature of its business, size and complexity. The Statutory Auditors as well as the Internal Auditors of the Company review the same on periodical basis. Further, significant observations, if any, and action taken reports on the same are considered by Audit Committee at their meeting.

The Act has made it mandatory for the Directors in their Responsibility Statement in the Board''s Report to state that "the directors, in the case of a listed company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively." The above statement has to be affirmed to by the Statutory Auditors in their Audit Report.

As per explanation provided to Section 134(5)(e) of the Act, "internal financial controls" means "the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information".

Components of internal control define internal control over financial reporting as "a process designed by, or under the supervision of the CEO and CFO" office and effected and approved by the Board of Directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Indian GAAP (IGAAP) and includes those policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets and liabilities of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IGAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company''s assets that could have a material effect on the financial statements.

Audit Committee Recommendations

During the year, all the recommendations of the Audit Committee were accepted by the Board. The composition of the Audit Committee is as mentioned in the Report on Corporate Governance, which forms a part of this Annual Report.

Corporate Social Responsibility (CSR)

The Policy on Corporate Social Responsibility of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as "Annexure 7".

Formal Annual Evaluation by the Board

A separate meeting of the Independent Directors of the Company was held on March 16, 2016, in which a formal evaluation of performance of the Board, Committees and the individual Directors was carried out. The performance evaluation was conducted based on the criteria specified in the Act and Regulation 17 of the SEBI (LODR) Regulations, 2015.

The feedback based on evaluation was discussed with the Chairman of the Board and given to the Directors.

Vigil mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The details of the same are explained in the Report on Corporate Governance. The Policy on Vigil Mechanism may be accessed on the Company''s website at the link: http:// www.kpit.com/company/investors/corporate-governance.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed to this Report as "Annexure 8".

Responsibility Statement of the Board of Directors

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors state that:

i) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual financial statements have been prepared on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

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

CEO & CFO Certification

Certificate by Mr. Kishor Patil, CEO & Managing Director and Mr. Anil Patwardhan, Chief Financial Officer, pursuant to the provisions of Regulation 17(8) of the SEBI (LODR) Regulations, 2015, for the year under review was placed before the Board of Directors of the Company at its meeting held on April 27, 2016.

A copy of such certificate forms a part of the Report on Corporate Governance.

Acknowledgments

We take this opportunity to thank all the shareholders of the Company for their continued support.

We thank customers, vendors, investors and bankers of the Company 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 further thank the governments of various countries where we have our operations. We also 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, the Software Development Centers (SDCs)/Special Economic Zones (SEZs) - Navi Mumbai, Chennai, Bengaluru, Hyderabad, Noida, Pune and all other government agencies for their support and look forward for their continued support in future.

For and on behalf of the Board of Directors

Pune S. B. (Ravi) Pandit

April 27, 2016 Chairman & Group CEO


Mar 31, 2015

Dear Shareholders,

The Directors are pleased to present the Twenty Fourth Annual Report together with the Audited Accounts of the Company for the Financial Year that ended on March 31, 2015.

Performance of the Company (In Million) Particulars Standalone 2014-15 USD Rs

Revenue from operations 203.75 12,457.47

Profit before Tax (PBT) 28.03 1,714.02

Profit after Tax (PAT) 24.87 1,520.44

Consolidated 2014-15 USD Rs. Rs

Revenue from operations 489.03 29,899.17

Profit before Tax (PBT) 40.64 2,484.67

Profit after Tax (PAT) 38.76 2,369.87

Result of Operations

During the year under review, the total revenues from operations (consolidated) increased to Rs. 29,899.17 Million, a growth of 10.98% over the previous year. Earnings before interest, tax, depreciation and amortization was Rs. 3,244.07 Million on consolidated basis. Net profit aftertax (consolidated) decreased by 4.81% to Rs. 2,369.87 Million.

In US Dollar terms, revenues from operations for the year on consolidated basis was 489.03 Million as against 444.32 Million during the previous year, a growth of 10.03%. Average realization rate was Rs. 61.14 per US Dollar.

Standalone sales for the fiscal year 2014-15 grew by 33.92% to reach Rs. 12,457.47 Million. Net profit after tax increased by 1.94 % to Rs. 1,520.44 Million.

Dividend

The Directors are pleased to recommend a dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) for the year under review. The total pay-out will amount to Rs. 259.58 Million including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer Rs. 152.00 Million to the General Reserve. An amount of Rs. 5,873.56 Million is

proposed to be retained in the Profit & Loss Account.

Share Capital

The Company issued and allotted 2,589,906 equity shares of Rs. 2/- each, to the eligible employees on exercise of options under the employee stock option schemes during the financial year 2014-15.

Consequently, the outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2015 is Rs.393.32 Million, consisting of 196,662,113 equity shares of Rs. 2/- each.

CRISIL Ratings

For the bank loan limits of Rs. 3,350 Million, CRISIL has assigned the long term credit rating of AA-/Stable and short term rating of A1 .

Quality, Information Security and Productivity

Our focus on quality, productivity and innovations has helped us deliver increased value to our customers. During the year, the Company achieved recertification for ISO 9001:2008 (Quality Management System). Further, our Systems Integration Facility was recommended for certification to ISO/TS-16949:2009 and ISO 20000-1:2011 (Information Technology Service Management System) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. The Company continues to maintain the highest maturity level 5 for CMMI-DEV® V1.3 (Development) as well as Automotive SPICE®. The Company is also certified for ISO 27001:2005 (Information Security Management Systems) and ISO 22301:2012 (Business Continuity Management System).

A number of initiatives were introduced during the year in line with the focus on quality and productivity improvement. In an effort to ensure that our delivery teams are well informed of the automation trends and are ahead of the technology curve, the Company launched the

Tools Symposium event. As part of this event, our vendor partners and internal practice teams showcased the latest technology trends, tools and accelerators through an exhibition as well as through detailed technical tutorials for the delivery teams.

We continue to strengthen our software delivery through Strategic Business Unit (SBU) specific quality and productivity improvement strategies defined in line with the technology advancements, customer expectations and business direction. As part of its ERP strategy, the Company further reduced the ERP implementation time by creating industry vertical specific accelerators which come fully equipped with industry best practices. The Product Engineering Services (PES) SBU continues to leverage the Continuous Build Automation platform to further strengthen the quality of software delivery. The Products and Platforms SBU further strengthened its production processes during the year under review.

Our process improvement drive continues to be strengthened by Six Sigma and lean process improvement projects being completed successfully, benefiting both KPIT and its customers. During the year, the Company has also helped its customers in implementing data analytics and Six Sigma based process improvements with more opportunities in the pipeline. As a result, 92% of our strategic customers have endorsed their satisfaction with our services and products.

Institutional Shareholding

As on March 31, 2015, the total Institutional shareholding in the Company was 59.17% of the total share capital.

Information about the Subsidiary Companies

As on March 31, 2015, the Company had 17 subsidiaries, including step-down subsidiaries.

During the year, under review, KPIT Global Solutions Limited was merged with the Company with effect from September 26, 2014.

Impact Automotive Solutions Limited, previously an associate company, became a 100% subsidiary of the Company with effect from July 01, 2014, consequent to the acquisition of its entire share capital by the Company.

Integrated Industrial Information, Inc., a US based company specializing in Product Lifecycle Management (PLM) software business, was acquired through KPIT Infosystems Inc., USA, effective from May 09, 2014. HD Solutions GmbH, a German Company specializing in PLM space, was acquired through KPIT Technologies GmbH with effect November 01, 2014 and was subsequently rechristened as KPIT Solutions GmbH.

During the year under review, the names of various overseas subsidiaries were changed as a part of the branding strategy of KPIT Technologies Limited.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements along with its subsidiary companies, which is forming a part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is also included in the Annual Report as "Annexure 1".

In accordance with Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing the standalone and the consolidated financial statements and all other documents required to be attached thereto has been placed on the website of the Company, www.kpit.com. Further, a report on the performance and financial position of each of the subsidiaries has also been placed on the website of the Company. Shareholders interested in obtaining a printed copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company's registered office.

Directors

Pursuant to Section 152 of the Companies Act, 2013, Mr. Sachin Tikekar retires by rotation at the forthcoming annual general meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

During the year, Mr. Anant Talaulicar and Ms. Elizabeth Carey resigned as Cummins nominee directors consequent upon Cummins Inc. divesting its investment in the Company. Further, upon their resignations, their alternate directors, Mr. Dwayne Allen and Mr. Cariappa Chenanda respectively also ceased to be alternate directors w.e.f. October 20, 2014.

Subsequently, Mr. Anant Talaulicar was appointed as an additional director w.e.f. October 21, 2014, to hold office up to the forthcoming annual general meeting. Further, Mr. Dwayne Allen was appointed as an alternate director of Mr. Anant Talaulicar w.e.f. October 21, 2014. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Anant Talaulicar as an independent director of the Company.

Owing to his other business commitments and preoccupations, Mr. Amit Kalyani resigned from the directorship of the Company w.e.f. February 20, 2015.

The Board places on record its appreciation of the valuable services provided by Ms. Elizabeth Carey, Mr. Amit Kalyani and Mr. Cariappa Chenanda during their tenure.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013 and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board at its meeting held on April 28, 2014, had noted the Whole-time Key Managerial Personnel (KMP) of the Company as below:

1. Mr. Kishor Patil - Chief Executive Officer (CEO) and Managing Director;

2. Mr. Anil Patwardhan - Chief Financial Officer (CFO);

3. Mr. R. Swaminathan - Company Secretary.

Auditors

Pursuant to the provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as statutory auditors of the Company in the last Annual General Meeting held on July 25, 2014, for a period of five years, subject to ratification by the members in every Annual General Meeting. Based on the recommendation of the audit committee, the Board recommends ratification of the appointment of B S R & Co. LLP, as the statutory auditors of the Company, at the forthcoming annual general meeting.

The Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, as the Secretarial Auditor to conduct Audit for the year under review. The Secretarial Auditor's report for the year under review is appended to this Report as "Annexure 2". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon forms a part of this Report. The Auditors' Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement is also attached.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Awards & Recognition

- KPIT won 2015 Oracle JD Edwards Partner Excellence Award for Outstanding Year-Round Success Story Nominations;

- Ms. Vaishali Vaid, VP & Head, Global HR, KPIT honored with the Rs.100 Most Talented Global HR Leaders Award' by CHRO Asia;

- KPIT won FY15 Oracle Excellence Award in Growth Partner of the Year Category - India;

- KPIT honored by Volvo Buses India with Project Development Excellence Award 2014;

- Mr. Kishor Patil, CEO & MD, KPIT honored with CA Business Leader Award - Corporate at the 8th ICAI Awards, 2014 by the Institute of Chartered Accountants of India (ICAI);

- Infor India recently awarded KPIT with the Promising Partner of the Year 2014 award for the Indian Subcontinent for implementing Infor solutions that create value for customers and generate new business opportunities;

- KPIT Chairman & Group CEO Mr. Ravi Pandit and CEO & MD, Mr. Kishor Patil, honored with Maharashtra Corporate Excellence (MAXELL) Awards 2014 for Excellence in Entrepreneurship.

Particulars of Employees

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as "Annexure 3(a)" to the Board's report.

The ratio of the remuneration of each director to the median employee's remuneration and other details prescribed in sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached to this report as "Annexure 3(b)".

Employees Stock Option Plan (ESOP)

Information relating to stock option plans of the Company is provided in "Annexure 4" of this report. The information is being provided in compliance with Clause 12 of Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place, a policy on prevention of sexual harassment and has put in place a redressal mechanism for resolving complaints received with respect to sexual harassment and discriminatory employment practices. No case of sexual harassment and discriminatory employment was reported during the financial year under review.

Fixed Deposits

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

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated

under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014

Conservation of Energy

The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection have been detailed in the previous years' Directors' Reports which the Company continues to implement. Apart from those initiatives, the following measures were undertaken to reduce energy consumption resulting in saving of 27% for Pune facility, 12% for Bangalore facility and 19% for Mumbai facility over the period of last 5 years:

- Revamping of AC chillers at Mumbai;

- Regulation of timings for AC operations and setting of standard temperatures at all locations in India;

- Installation of AC remote controls at all meeting rooms and cabins;

- Replacing T5 lights (56W) with LED lights (14W);

- Regulation of UPS and Capacitors as per load requirement.

Green Initiatives

The following initiatives were undertaken at company level to create awareness about importance of environmental protection and reducing Traffic/Pollution:

- "Greenathon" awareness run for zero garbage organized on June 14, 2014.

- Company's initiative for launch of HIA MIDC Joint Transport Initiative (Metro-zip) on September 01, 2014 to reduce traffic congestion.

- Tree plantation drive conducted on August 09, 2014 during which 1,000 trees were planted.

Occupational Health and Safety Assessment Series (OHSAS)

The following activities were carried out by the Company under OHSAS during the year:

- Free Dental and Eye checkup conducted on May 28, 2014.

- Awareness Session on Tobacco Cessation was organized on June 25, 2014.

- Propel 2014 (Health week) in November-2014 which included:

- Yoga Sessions

- Complete Body Checkup (Total approx. 400 employees participated)

- Laughter session

- Health Sessions (Hair & Skin, Healthy Heart, Diabetes,

Ergonomics, Hormonal Imbalances in women)

- Zumba Health Related Games like running, Brisk walk, step climbing

- First Aid training and certification session for employees on December 16, 2014

- Road Safety awareness rally organized on February 5, 2015.

Technology Absorption

In the financial year 2014-15, we have successfully rolled out Microsoft Dynamics CRM across all SBUs and Industry Business Units (IBUs) globally. This has helped us in bringing uniformity and better visibility on opportunity to order processes. We have also launched Analytics platform using SAP, giving users self-service capabilities for analyzing data enabling data driven decision making culture. SAP reimplementation project is underway in the Company which will help in simplifying the business processes. We have seamlessly integrated IT infrastructure of all KPIT global offices helping to give ONE KPIT experience to customers and improving collaboration across the organization. Other Key initiatives planned in the coming year are rollout of Enterprise Digital Transformation called SMART Enterprise, where we are building digital platform for transforming business processes using SMACS technologies, implementation of Software defined data center including automation and self service provisioning of network, security & storage infra in addition to computing infrastructure.

Research and Development (R&D) Activity

Innovation forms the core of the Company. We are working on breakthrough & disruptive technologies, where the focus is to develop practice-based frugal innovation across all the SBUs. Our research activities in Engineering & Business Information Technology space strive towards co-innovation, where we work with our customers to jointly develop solutions and create value for the end consumer, who would be our customers' customer. The Company has been continuously investing in research and development with these goals in mind. These investments are made not just at the corporate level, but also in each Strategic Business Unit (SBU). These Research & Development expenses are being incurred under respective SBUs by setting up various cost projects. The Company has constructed a new R&D center in its Hinjewadi campus, and the building is home to the Center for Research in Engineering, Science and Technology (CREST) as well as other teams working on R&D projects. We have been re-certified by the Department of Scientific and Industrial Research as a recognized R&D center.

During the year, the Company successfully conducted research assignments for its customers which included technical consultations on electronics optimization in vehicles for a vehicle maker. We also conducted joint R&D with an automotive customer to deploy our technology for automatically converting software code to behavioral models. We have also been successful in getting customer projects based on the R&D work we have conducted in the area of Driver Status Monitoring for Advanced Driver

Assistance Systems. Discussions are on with a customer for yet another project related to an around view system based on our previous R&D work.

The Company has been investing into an affordable & Innovative Plug-in Hybrid Electric Vehicle Technology and the same is branded as "Revolo" to take it to the market place. Revolo is a technology that can be incorporated in existing vehicle to convert it to a plug-in hybrid electric vehicle and also as an original equipment fitment. The technology increases fuel efficiency by around 35% and reduces CO2 emission by around 30%. These performance parameters are tested at Automotive Research Association of India (ARAI). The solution is applicable from a small car of 800 cc to commercial vehicle up to 3000 cc. The benefit arising out of performance improvement, results in net energy saving of over 25%.

The R&D employed for the development of Revolo was based on the school of thought of frugal innovation.

Such an innovation would serve to be more affordable for the consumers at large. Revolo would go a long way in promoting clean energy technology that would protect the environment from harmful Green House Gases. Revolo employs electric power with an objective to improve the efficiency of existing powertrain. Currently 15 patents have been hied globally for the technology developed for Revolo.

The technology investment has been done by the Company with focus on building engineering solution for the automotive engines having capacity from 800 cc to 3000 cc applicable on both diesel as well as petrol driven vehicles. The homologation certification of Revolo aftermarket solution for one of the vehicle models has been completed and launch preparation is in process. KPIT continues to focus on building this technology and Impact Automotive Solutions Limited (wholly owned subsidiary of KPIT), will drive commercial use of this technology.

The total amount spent on R&D activities is given below:

Notes:

1. During the year, the Company has set up a state of the art facility for its R&D Activities, construction of which is complete as of March 31, 2015. The Company has incurred a capital expenditure of Rs. 94.27 million during the year for this facility. The company has been granted recognition of this of facility with the Department of Science & Industrial Research which is valid up to March 31, 2018. The eligible capital expenditure for 200 % weighed deduction is Rs. 37.55 million.

2. Out of balance R&D spend of Rs. 197.33 million , eligible R&D revenue expenditure under Section 35(2AB) of the Income Tax Act, 1961 for KPIT Technologies Limited is Rs. 78.21 Million. The weighted deduction is equal to 200% of such expenditure incurred. A separate section on R&D activities undertaken by the Company has also been included in the annual report.

Foreign Exchange Earnings and Outgo

Given the global nature of the business of the Company, exports always form its thrust. Total foreign exchange earnings during the year were Rs. 8,783.50 Million (previous year Rs. 5,955.68 Million) and foreign exchange outgo (including imports) was Rs. 564.07 Million (previous year Rs. 492.92 Million).

Board Meetings

Six meetings of the Board of Directors were held during the year. More details about the meetings are available in the report on Corporate Governance, which forms a part of this Report.

Committees of Board

The details regarding Committees of the Board of Directors of the Company are given in the Report on Corporate Governance, which forms a part of this Report.

Independence of the Board

The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013.

1. Dr. R. A. Mashelkar

2. Ms. Lila Poonawalla

3. Prof. Alberto Sangiovanni Vincentelli

4. Mr. Adi Engineer

5. Mr. Anant Talaulicar

6. Mr. Dwayne Allen

(Alternate Director to Mr. Anant Talaulicar)

Company's Policy on Directors' appointment and remuneration

Pursuant to the provisions of Section 134 (3) (e) of the Companies Act, 2013, the policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section 178 (3), is appended as "Annexure 5" to this report.

Particulars of loans, guarantees or investments under Section 186

Particulars of loans, guarantees or investments made during the year under review, pursuant to the provisions of Section 186 of the Companies Act, 2013 are as below:

Name of the subsidiary Nature of Duration Rate of Amount transaction Interest (Rs in Million (%)

KPIT Infosystems Inc. Investment - - 727.32

Impact Automotive Solutions Investment - - 107.84 Limited

KPIT (Shanghai) Software Investment - - 27.74 Technology Co. Limited

KPIT Technologies (UK) Limited Investment - - 195.38

KPIT Technologies (UK) Limited Loan 36 7.752 74.00 Months

KPIT Infosystems ME FZE Guarantee Valid - 62.59 till December 31,2015

Name of the subsidiary Purpose

KPIT Infosystems Inc. For funding the acquisition of Integrated Industrial Information Inc. Impact Automotive Solutions Limited Payment to Bharat Forge Limited for acquisition of 50% of the outstanding shares of Impact Automotive Solutions Limited

KPIT (Shanghai) Software Technology Co. Limited For funding working capital requirements of KPIT (Shanghai) Software Technology Co. Limited

KPIT Technologies (UK) Limited For funding the acquisition of HD Solutions GmBH

KPIT Technologies (UK) Limited For funding working capital requirements of KPIT Technologies (UK) Limited

KPIT Infosystems ME FZE For setting up credit facilities for KPIT Infosystems ME FZE

Particulars of contracts or arrangements with related parties referred to in Section 188(1)

Pursuant to the provisions of Section 134 (3) (h) of the Companies Act, 2013, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, and prescribed in Form AOC - 2 of Companies (Accounts) Rules, 2014, are appended as "Annexure 6" to this report.

Material changes and commitments affecting the financial position of the Company

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

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Risk Management Policy

A mechanism to identify, assess, monitor and mitigate various risks to key business objectives of the Company is in place. A write-up on enterprise risk management is included elsewhere in this annual report.

Internal Control Systems and Adequacy of Internal Financial Controls

The internal control systems of the Company are adequate considering the nature of its business, size and complexity. The Statutory Auditors as well as Internal Auditors of the Company review the same on periodical basis. Further, significant observations, if any, and action taken reports on the same are considered by Audit Committee at their meeting.

Audit Committee Recommendations

During the year, all the recommendations of the Audit Committee were accepted by the Board. The Composition of the Audit Committee is as described in the Corporate Governance Report.

Corporate Social Responsibility

The Policy on Corporate Social Responsibility (CSR) of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during

the year as per Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as "Annexure 7" to this Report.

Formal Annual Evaluation by the Board

A separate meeting of the Independent Directors of the Company was held for formal evaluation of performance of the Board, Committees and the individual Directors. The performance evaluation was conducted based on the criteria specified in the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The feedback based on evaluation was given to the directors.

Vigil mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The details of the same are explained in the Corporate Governance Report. The Policy on Vigil Mechanism may be accessed on the Company's website at the link: http://www.kpit.com/company/investors/corporate- governance.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure 8" to this Report.

Responsibility Statement of the Board of Directors

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors state:

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

ii) that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

iii) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the annual financial statements have been prepared on a going concern basis;

v) that they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

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

CEO & CFO Certification

Certificate by Mr. Kishor Patil, CEO & Managing Director and Mr. Anil Patwardhan, Chief Financial Officer, pursuant to the provisions of Clause 49 (IX) of the Listing Agreement, for the year under review was placed before the Board of Directors of the Company at its meeting held on April 28, 2015.

A copy of such certificate is annexed to this report.

Acknowledgments

Your Directors take this opportunity to thank all the shareholders of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, HDFC Bank Ltd., The Hongkong and Shanghai Banking Corporation Ltd., Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. We also thank all the employees of KPIT group for their valuable contribution to the Company.

We further place on record our gratitude to the Governments of United States of America, United Kingdom, Germany, France, Netherlands, Japan, Singapore, South Korea, China, UAE, South Africa, Canada and Brazil. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bengaluru, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges, Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Sd/- Pune, S. B. (Ravi) Pandit April 28, 2015 Chairman & Group CEO


Mar 31, 2013

Dear Shareholders,

The Directors are pleased to present the Twenty Second Annual Report together with the Audited Accounts of the Company for the Financial Year ended on March 31, 2013.

Performance of the Company

Particulars Standalone Consolidated 2012-13 2012-13 USD Rs. USD Rs. Million Million Million Million

Revenue from operations 131.14 7,152.41 410.45 22,386.28

Expenses 107.68 5,872.60 360.16 19,643.38

Profit before exceptional items and Tax 24.96 1,361.39 52.44 2,860.28

Profit before Tax (PBT) 24.62 1,342.91 52.20 2,847.23

Profit after Tax (PAT), but before Minority Interest and share of profit in Associate 18.89 1,030.51 38.17 2,081.63

Profit for the period 18.89 1,030.51 36.49 1,990.05

Result of Operations

During the year under review, your Company continued to post industry- leading growth rate to clock total sales (consolidated) of Rs. 22,386.28 Million, a growth of 49.24%. Earnings before interest, tax, depreciation and amortization (EBITDA) was Rs. 3,639.86 Million on consolidated basis. Net profit after tax grew by 36.91% to Rs. 1,990.05 Million.

In USD terms, the sales for the year on a consolidated basis was 410.45 Million as against 309.28 Million during the previous year, a growth of 33%. Average realization rate was Rs. 54.54 per US Dollar.

Standalone sales for the fiscal year 2012-13 grew by 16.70% to reach Rs. 7,152.41 Million. Net profit after tax increased by 38% to Rs. 1,030.51 Million.

Dividend

The Directors are pleased to recommend a dividend @ 45% (Rs. 0.90 per equity share of face value of Rs. 2/- each) on the paid-up equity share capital of the Company. The total pay-out will amount to Rs. 201.69 Million-including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer an amount of Rs. 10 Million towards KPIT Cummins Infosystems Limited Community Foundation Reserve. This Reserve would be utilized for various community benefit schemes as may be approved by the Management.

Your Directors also propose to transfer an amount of Rs. 100 Million towards KPIT Cummins Technology Fund. This fund would be utilized to drive high end innovative technology initiatives for promoting green growth and energy conservation, objectives that are dearer to the Company''s heart and which will benefit the Company''s ecosystem at large.

An amount of Rs. 100 Million is proposed to be transferred to KPIT Employees'' Welfare Fund. This Fund would be utilized to promote the welfare of the employees of KPIT group in various forms.

Your Directors propose to transfer Rs. 103.05 Million to the General Reserve. An amount of Rs. 515.47 Million is proposed to be added to the balance in the Profit & Loss Account.

Share Capital

Van Dyck (an affiliate of ChrysCapital), CX Partners Fund 1 Limited and AAJV Investment Trust (both affiliates of CX Partners) were allotted 12,960,000 equity shares on preferential basis for a total amount of Rs. 1,620 Million during the financial year under review. The proceeds of the issue will be utilized for funding the growth and operations of the Company and/or its subsidiaries, including the working capital and capital expenditure requirements of the Company and/or its subsidiaries, acquisition,investments in joint ventures and general corporate purposes. Pending their deployment for the aforesaid purposes, these funds have been invested in liquid plans of mutual funds.

The Company also allotted 1,912,323 equity shares of Rs. 2/- each, to employees under the ESOP schemes in the financial year 2012-13.

The outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2013 is Rs. 385.63 Million, consisting of 192,815,199 equity shares of Rs. 2/- each.

People

The Company, together with its subsidiaries, had 8,321 employees as on March 31, 2013.

CRISIL Ratings

For the revised bank loan limits of Rs. 3,350 million, CRISIL has assigned the long term credit rating of AA-/Stable and short term rating of A1 .

Quality, Information Security and Productivity

Quality is an integral part of our business and is woven into every aspect of our operations. Our constant quest for quality is evidenced by the certification/re-certification for ISO 9001:2008 (Quality Management Systems) and ISO 20000:2011 (Information Technology Service Management) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. We continue to hold our CMMI Level 5 certification for Development Ver. 1.2 and Auto Spice Level 5 certification. The Company is also certified for ISO 27001:2005 (Information Security Management Systems) and ISO22301:2012 (Business Continuity Management). Most of our customers have endorsed their satisfaction with our services and products by giving us an average customer satisfaction score of 87%. During the year, the Company also initiated the deployment of a productivity improvement tool which helps employees and their managers analyse the time utilization and productivity of employees and the results have been encouraging.

Institutional Holding

As on March 31, 2013, the Institutional Holding in the Company was 49.70% of the listed capital including the shares held by Warhol Limited, Van Dyck and CX Partners Fund 1 Limited to whom shares were issued through preferential allotment.

Change of Name

Over the years, the Company has emerged as a major technology service provider, catering to customers in the automotive, manufacturing, energy & utilities sectors. With its technology focus, the Company has attained technology leadership position in the industry. Therefore, the Board believes that the name of the Company should also reflect the Company''s technology focus & leadership position. Hence, the Directors propose to change the name of the Company as ''KPIT Technologies Limited''. Special resolutions have been put up for shareholders'' approval of the name change and the consequential amendments in the Company''s memorandum and articles of association.

Information about the Subsidiaries

As on March 31, 2013, the Company had 15 subsidiaries, including step-down subsidiaries.

During the year under review, the Company increased its shareholding in Systime Global Solutions Private Limited to 76%. Systime ME FZCO, a wholly owned subsidiary of SYSTIME Global Solutions Pvt. Ltd., was rechristened as KPIT Infosystems ME FZE during the year.

It is proposed to amalgamate Sparta Infotech India Private Limited with the Company and in this connection, the Board of Directors of the Company and that of Sparta Infotech India Private Limited have already approved the scheme of amalgamation. The Company has filed the applications with Bombay Stock Exchange and National Stock Exchange for in-principle approval to the said scheme of amalgamation. The merger application is expected to be filed with the High Court shortly.

SolvCentral.com Inc, a direct wholly-owned subsidiary of KPIT Infosystems Inc, and In2Soft GmbH, a direct wholly-owned subsidiary of KPIT Infosystems GmbH, were merged with their respective parent companies during the year.

The details of individual financial performance of the subsidiaries have been reported in the statement pursuant to Section 212 of the Companies Act, 1956, which is given elsewhere in the Annual Report.

Particulars required as per Section 212 of the Companies Act, 1956

As per Section 212 of the Companies Act, 1956, a holding Company is required to attach the Directors'' Report, Auditors'' Report, Balance Sheet and Profit and Loss Account of all the subsidiaries. However the Government of India vide General Circular No: 2/2011 has given a general exemption to the companies from attaching the annual reports of subsidiaries provided certain conditions are fulfilled. Accordingly, this annual report contains the consolidated financial statements of the Company and does not contain the financial statements of the individual subsidiaries. The Statement pursuant to Section 212 of the Companies Act, 1956, is given elsewhere in this annual report. The Company will make available the audited annual accounts and related detailed information of the subsidiary companies, where applicable, upon request by any member of the Company. The Company will also upload the accounts of the individual subsidiaries on its official website. These documents will also be available for inspection during business hours at our registered office.

Directors

Pursuant to Article 72 of the Articles of Association of the Company read with Section 256 of the Companies Act, 1956, Mr. Anant Talaulicar and Mr. Amit Kalyani retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. Sanjay Kukreja was appointed as an additional director during the year. Mr. Kukreja holds a MBA from Indian Institute of Management, Bangalore. He has been associated with ChrysCapital, a leading fund management house for more than a decade. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Kukreja as a director of the Company.

Mr. BVR Subbu was appointed as an additional director on April 29, 2013. Mr. Subbu holds a Post Graduate Diploma from Indian Institute of Foreign Trade, Delhi. He was President of Hyundai India and was also associated with the Tata group for over two decades, holding various responsibilities, including its commercial vehicles business. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Subbu as a director of the Company.

Mr. Dwayne Allen has joined the board recently as alternate director to Mr. Anant Talaulicar. Mr. Allen is Executive Director of Cummins Inc responsible for Global IT for Cummins'' components business and Functional Excellence leader for PLM (Product Lifecycle Management).

Ms. Manisha Girotra was appointed as an additional director during the year and holds office till the date of the ensuing Annual General Meeting. Due to her professional pre-occupations, Ms. Girotra does not intend to seek appointment as a director at the ensuing Annual General Meeting.

Mr. Bruce Carver, director and Mr. Mark Gerstle, alternate director, resigned from the board with effect from April 29, 2013. During the period of their directorship, Mr. Carver and Mr. Gerstle made significant contributions to the Company. The Board places on record its sincere appreciation of the valuable services and guidance provided by Mr. Bruce Carver and Mr. Mark Gerstle during their tenure as Directors of the Company.

Auditors

M/s. Deloitte, Haskins & Sells, have been the statutory auditors of the Company for the past 10 years. The Board believes that periodic rotation of statutory auditors is a good corporate governance practice the Company should adopt. The proposed Companies Bill also includes provisions for rotation of audit firms after two consecutive terms of five years each.

The Audit Committee, at its meeting held on April 29, 2013, recommended the appointment of M/s. B S R & Co, Chartered Accountants, 703, 7th floor, Godrej Castlemaine, Bund Garden Road, Pune 411 001 as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting of the Company. Pursuant to the Audit Committee''s recommendation, the Board of Directors has, at its meeting held on April 29, 2013, approved the appointment of M/s. B S R & Co, Chartered Accountants as the Statutory Auditors of the Company at the forthcoming Annual General Meeting for the financial year 2013-14. This is subject to shareholders passing the necessary resolution for appointment of M/s. B S R & Co, Chartered Accountants at the forthcoming Annual General Meeting.

In this connection, the Company has received a special notice pursuant to the provisions of Sections 190 and 225 of the Companies Act, 1956 proposing the appointment of M/s. B S R & Co, Chartered Accountants, as the Statutory Auditors of the Company in place of M/s. Deloitte, Haskins & Sells for the year 2013-14. The resolution for appointment of M/s. B S R & Co, Chartered Accountants, as the Statutory Auditors of the Company is being included in the notice of the Annual General Meeting. The requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956, has been received from M/s. B S R & Co, Chartered Accountants.

M/s. Deloitte, Haskins & Sells, retire at the conclusion of the ensuing Annual General Meeting and do not intend to seek re-appointment.

The Board of Directors records its deepest sense of appreciation of the valuable services provided by M/s. Deloitte, Haskins & Sells as the Statutory Auditors of the Company during their tenure with the Company.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed to this Annual Report. The Auditors'' Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Particulars of Employees

As required under the 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, a statement showing the names and other particulars of employees forms a part of this report. However, having regard to the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Responsibility Statement of the Board of Directors

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

i) in the preparation of the accounts for the financial year ended March 31, 2013, the applicable accounting standards have been followed and there has been no material departure;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the profit of the Company for the said financial year;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the year ended March 31, 2013 on a ''going concern'' basis.

Employees Stock Option Plan (ESOP)

Information relating to stock option programme of the Company is provided in the Annexure I of this report. The information is being provided in compliance with Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

Fixed Deposits

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988

Conservation of Energy - Our Company''s primary business being Software services, our operations are conducted with energy conservation as a focus area. The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection are as follows:

1. Energy Conservation measures:

The facility at Hinjawadi Pune reflects KPIT''s commitment to energy efficiency and "green growth". The green features incorporated in the building design have been detailed in the directors'' report of the previous year. As a result of various initiaties taken by the Company for reducing energy consumption, NASSCOM has declared KPIT Hinjawadi campus as "Energy Champion", one of the only three companies in IT / ITES sector to be so declared.

2. Various steps have been undertaken to utilize the energy in an optimum manner some of which are given below:

a. Introduced innovative solution to extract energy from kitchen exhaust air. Wind turbine, installed on kitchen exhaust stystem, which is called as waste air co-generation system along with solar energy panels generates energy.

b. Replacement of normal TFT monitor based computers with energy efficient thin clients.

c. Consolidation of desktop servers.

3. Continuation of PC Shut Down Drive undertaken to switch off PCs during non working hours resulting into considerable reduction in energy consumption.

Computer hardware:

a. Significant reduction in e-waste generation achieved due to increased IT Hardware Refreshment Cycle for desktops, laptops & workstations.

b. Reduction in the asset ratio to 1.10:1 due to deployment of the Vblock platform with VDI, thereby thereby reducing the consumption of computer hardware.

Water Conservation measures:

The Company''s conservation measures also focus on reduction of consumption of water. 70% of water gets treated through sewage treatement plant and is recycled & used for gardening purposes. Following initiatives were carried out for reducing water consumption which has resulted into 25% savings in water usage:

a. Revamping of Sprinkler system.

b. Adjusting water pressures at taps.

c. Controlling fresh water usage for gardening.

Environment Improvement initiatives:

a. Tree plantation within KPIT Campus during environment week.

b. Vermi Compost Plant: A vermicompost plant has been set up for treating the organic waste, which generates 3,500 kg vermin compost manure every year.

c. Recycling or disposal of E-waste through authorized vendors.

d. Signification savings in consumption of paper and reduction in generation of municipal waste and recyclable waste by around 23%.

e. Arranged lectures from environmentalists for employees to create awareness.

Occupational Health and Safety Assessment Series (OHSAS):

The Company''s Hinjawadi site was successfully certified for ISO 14001:2004 (Environmental Management System) & OHSAS 18001:2007 standards in January 2013. We are proud to mention that these certifications were won on the basis of in-house efforts and without any external consultancy. During the year, the following activities were carried out by the Company under OHSAS:

- Music & meditation session

- Propel (Health week)

- Health risk assessment survey

- Drum Circle

- Health talk on Dengue and its precautions

- Health talk on homeopathy

- Health talk on Cervical Cancer

- Bone Mineral Density Camp

- Lectures by RANJAI on Occupational health & Environment protection as part of International Safety Week.

Research and Development (R & D) Activities:

Innovation forms the core of the Company and the Company has been continuously investing in research and development. Innovation being key focus area, the Company has been making significant investments in the Research & Development activities, not just at the corporate level but for each respective Strategic Business Units (SBU). These Research & Development expenses are being incurred under respective SBUs by setting up various cost projects. We are working on breakthrough & disruptive technologies, where the focus is to develop practice based frugal innovation across all the SBUs. Our research activities in Engineering & Business Information technology space will strive towards co-innovation, where we would work with our customers to jointly develop solutions and create value for the end consumer, who would be our customers'' customer.

During the year, the Company continued its research in software engineering. These efforts have resulted in innovative products in software engineering to support both maintenance and development projects. Research and Development costs are expensed as incurred under SBU budget as cost project and Development costs of the marketable software are capitalized when its commercial feasibility is established, future economic benefits of the project are probable and its costs can be measured reliably. The total spend on these activities across all group entities is given below.

Amt in INR Mn.

KPIT R&D - Expenses for the year ended March 31, 2013

SBU A&E SBU Details IES SBU

Expensed 33.76 A&E Crest Projects 21.47

Capital Work in Progress 26.13 Revolo *** -

Capital Work in Progress 43.93 Infotainment *** -

103.821 21.47

SBU Details SAP SBU Details Total

Expensed IES Crest Projects - - 55.23 ***

Capital Work in Progress 31.15 SAP Projects 57.28

Capital Work in Progress - 43.93

31.15 156.43

*** Please refer Note no. 45 (3) under Standalone Financial Statements of KPIT Cummins Infosystems Limited.

The Company has set up its own research and development center called ''Center for Research in Engineering Sciences and Technology'' or CREST. A separate section on R&D activities undertaken by the Company, forms a part of this report.

Technology Absorption - In its pursuit of growth, the Company constantly and actively seeks and absorbs new technology in its operations. During the year, the Company successfully conducted research for its customers. It includes automatic parallelization of sequential code for multicore, automated software code validation checks, parallelization of advanced driver safety system to run it at real time speeds, developing traffic density estimation and raindrop removal from windshield. The Company has implemented global MPLS connectivity across all Indian and international offices and deployed Telepresence solution (High Definition Video Conferencing). This has helped company to demonstrate global capabilities to customers seamlessly. Further, the Company has developed the technology for secure interaction of apps between a mobile device and infotainment system of a car. With this, customers can use KPIT infotainment platform to enable smartphone interaction with a car in a unique manner. The Company continues to focus on using these technologies for its own use as well as creating value for customers.

Foreign Exchange Earnings and Outgo - Given the global nature of the business of the Company, exports always form its thrust The Company''s growth at rates above the industry rates bears testimony to its export competitiveness. Total foreign exchange earnings during the year have been Rs. 5,885.51 Million (previous year Rs. 5158.17 Million) and foreign exchange outgo has been Rs. 275.23 Million (previous year Rs. 434.56 Million).

Awards/Recognition

- Mr. Kishor Patil, Chief Executive Officer and Managing Director was selected among 16 finalists for the Ernst & Young Entrepreneur of the Year Award 2012.

- KPIT Cummins was awarded with EMC Transformers Award 2012 for successful implementation of innovative solutions that helped in transforming internal IT functions.

- KPIT Cummins received EDGE 2012 award (Enterprise Driving Growth and Excellence through IT) in the category of "Data Centre and Networking" at ITEROP 2012, Mumbai for effective implementation of Unified computing infrastructure.

- KPIT Cummins was awarded with the prestigious Mahesh Modi Environment Excellence award for 2013. Revolo - the plug-in hybrid solution was honoured for its impact on environmental improvement.

- KPIT Cummins was awarded with the 2012 Oracle Excellence Award for Specialized Partner of the Year - North America for demonstrating an outstanding and innovative solution based on Oracle products.

- KPIT unveiled Rapid App Deployment Framework to Develop & Deploy Apps Anywhere - Apps-to-Go is a safe, secure and seamless solution for car makers to deploy vehicle centric custom branded apps on head units and mobile devices.

- KPIT Cummins partnered with Livio to bring new applications to cars. The partnership aims to integrate Livio Connect with GENIVI compliant KIVI software framework allowing cars to seamlessly and securely communicate with mobile devices.

- Two patents awarded - KPIT was granted two US patents by USPTO which were filed in the area of hybrid technology.

Acknowledgments

Your Directors take this opportunity to thank all the shareholders of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, HDFC Bank Ltd, The Hongkong and Shanghai Banking Corporation Ltd, Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. We also thank all the employees of the KPIT group for their valuable contribution in the growth of the Company.

We also thank the Governments of United States of America, United Kingdom, Germany, France, Netherlands, Japan, Singapore, South Korea, China, UAE, South Africa, Canada and Brazil. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bangalore, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges, Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Pune, S. B. (Ravi) Pandit

April 29, 2013 Chairman & Group CEO


Mar 31, 2012

The Directors are pleased to present the Twenty First Annual Report together with the Audited Accounts of the Company for the Financial Year ended on March 31, 2012.

Performance of the Company

Particulars Standalone Consolidated

2011-2012 2011-2012

USD Rs USD Rs Million Million Million Million

Revenue from operations 126.37 6,128.92 309.28 15,000.12

Expenses 107.63 5,219.97 275.31 13,352.46

Profit before exceptional items and Tax 19.96 968.17 36.82 1,785.90

Profit before Tax (PBT) 22.03 1,068.62 38.89 1,886.35

Profit after Tax (PAT), but before Minority Interest and share of profit in Associate 15.40 746.68 29.89 1,449.67

Profit for the period 15.40 746.68 29.97 1,453.54

Result of Operations

Total consolidated revenue for the fiscal year 2011-12 (FY12) was Rs 15,000.12 Million. Gross Profit and Earnings before interest, tax, depreciation and amortization (EBITDA) are Rs 5,065.69 Million and Rs 2,165.76 Million, respectively. Gross profit margin is 33.77% of the revenue. Net profit after tax grew by 53.68% to Rs 1,453.54 Million.

The revenues for the year on a consolidated basis in USD terms are USD 309.28 Million as against USD 216.17 Million during the previous year. Average realization rate was Rs 48.50 per US Dollar.

Standalone revenue for the fiscal year 2011-12 (FY12) was Rs 6,128.92 Million. Net profit after tax increased by 7.46% to Rs 746.68 Million.

Transfer to Reserves

Your Directors propose to transfer Rs 75 Million to the General Reserve. An amount of Rs 1,006.42 Million is proposed to be retained in the Profit & Loss Account.

Your Directors propose to transfer an amount of Rs 27.20 Million towards KPIT Cummins Infosystems Limited Community Foundation Reserve. This Reserve would be utilized for various community benefit schemes as may be approved by the Management.

Your Directors propose to transfer an amount of Rs 100 Million towards KPIT Cummins Technology Fund. This fund would be utilized to drive high end innovative technology initiatives for promoting green growth and energy conservation, which will successively benefit the Company.

Your Directors propose to transfer an amount of Rs 100 Million towards KPIT Employees' Welfare Fund. This Fund would be utilized to promote welfare of its employees in various forms.

Dividend

The Directors are pleased to recommend a dividend @ 35% (Rs 0.70) per equity share of face value of Rs 2/- each on the paid-up equity share capital of the Company.

Share Capital

During the year the Company declared issue of bonus shares in the ratio of 1:1 (that is one equity share of Rs 2/- each for every share of Rs 2/- held). On March 15, 2012, the Company allotted 88,971,438 equity shares in the ratio 1:1 and a sum of Rs 177,942,876 out of reserves and surplus was capitalized for distribution amongst the members.

The Company allotted 1,108,023 equity shares of Rs 2/- each, to the employees under the ESOP schemes in the financial year 2011-12.

The outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2012 is Rs 355,885,752 consisting of 177,942,876 equity shares of Rs 2/- each.

Manpower Strength

The Company had 7,719 employees as on March 31, 2012. During the year there was a net addition of 1,405 employees, which increased the employee strength by 21.57% over the previous year.

CRISIL Ratings

CRISIL has confirmed the financial credit rating of AA-/Stable for the revised bank limits of Cash Credit and Term Loan facilities and P1 for Bank Guarantee & Letter of Credit, for the Company.

Quality

The Company is highly committed to International standards raised by the Industry. The Company has been awarded ISO 9001:2008 (Quality Management Systems), ISO 27001:2005 (Information Security Management Systems), ISO 20000:2005 (Information Technology Service Management) and BS2599:2007 (Business Continuity Management) certificates by TUV Nord Cert GmbH for providing Software Development, Product Engineering, Product Support and Enabling Services

Institutional Holding

As on March 31, 2012, the Institutional Holding in the Company was 30.03% of the listed capital. This does not include approximately 9.55% held by Warhol Limited. The total institutional holding including that of Warhol Limited as on March 31, 2012 stood at 39.58%.

Information about the Subsidiary Companies

As on March 31, 2012 the Company had twenty three subsidiaries:

1. KPIT Infosystems Inc. (KPIT US) was incorporated in 1998, in the US, for catering to the demand of US based customers. The Company holds 100% of the share capital and voting power of KPIT US. KPIT US earned revenues of Rs 4,970.94 Million (previous year Rs 3,763.04 Million) and recorded a profit of Rs 6.07 Million (previous year loss of Rs 32.16 Million) ended on March 31, 2012. The above profit does not include translation gain of Rs 131.52 Million.

2. KPIT Infosystems Limited (KPIT UK) was incorporated in 1996, in UK, for catering to the demand of customers based out of UK & Europe. The Company holds 100% of the share capital and voting power of KPIT UK. During the year, KPIT UK has earned revenues of Rs 1,070.03 Million (previous year Rs 788. 33 Million) and registered a loss of Rs 0.14 Million (previous year loss of Rs 17.04 Million). The above loss does not include translation gain of Rs 42.91 Million.

3. KPIT Infosystems GmbH (KPIT Germany) was added as a step down subsidiary in 2005. KPIT Germany is a 100% subsidiary of KPIT UK. This subsidiary is completely focused on huge automotive market in Germany and was added to expand our customer base in this segment with a vision to become No. 1 global product engineering partner to the automotive industry. KPIT Germany reported a profit of Rs 37.71 Million for the year ended March 31, 2012 (previous year a profit of Rs 16.36 Million) on revenues of Rs 908.93 Million (previous year Rs 555.45 Million). The above profit does not include translation gain of Rs 16.08 Million.

4. KPIT Infosystems Inc. [a.k.a. SolvCentral.com Inc.] (SolvCentral), based in US was added as a step down subsidiary in 2005. SolvCentral is focused in the Business Intelligence (BI) space in the US market. SolvCentral reported a profit of Rs 0.41 Million for the year ended March 31, 2012 (previous year loss of Rs 27.17 Million) with revenues of Rs 6.33 Million (previous year Rs 74.84 Million).

5. KPIT Infosystems France SAS (KPIT France) was formerly known as Pivolis. KPIT France has provided direct presence in France which is an important market in European region from KPIT's growth perspective. In the Financial year 2011-12 KPIT France reported a loss of Rs 3.97 Million (previous year a profit of Rs 1.22 Million) with revenues of Rs 260.51 Million (previous year Rs 325.99 Million).

6. Sparta Consulting Inc. (Sparta Inc.) was added as a step down subsidiary in 2009. Sparta Inc. is a leading provider of high end SAP solutions and is one of the fastest growing SAP consultancies in North America. Sparta Inc. reported a profit of Rs 111.14 Million for the year ended March 31, 2012 (previous year profit of Rs 119.51 Million) on revenues of Rs 4,089.51 Million (previous year Rs 2,691.40 Million).

7. Sparta Infotech India Private Limited (Sparta India), is a subsidiary of Sparta Inc. Sparta India was incorporated to cater Sparta's India based clientele. Sparta India reported a profit of Rs 130.61 Million for the year ended March 31, 2012 (previous year profit of Rs 111.22 Million) on revenues of Rs 373.73 Million (previous year Rs 304.73 Million).

8. In2Soft GmbH (In2Soft) based in Munich, Germany, is a wholly owned subsidiary of KPIT Germany. During the year, KPIT Germany acquired the remaining stake of 26% in In2Soft. In2Soft is an expert in diagnostics and telematics for the automotive industry. In2Soft develops the OBU software for the tolling systems in Germany, Europe and world-wide and provides with VisualODX, a modern and complete tool set for vehicle diagnostics. In2Soft reported a profit of Rs 44.28 Million for the year ended March 31, 2012 (previous period a profit of Rs 7.33 Million) on revenues of Rs 294.03 Million (previous period Rs 99.19 Million). (Previous period's figures are for post acquisition period i.e. October 1, 2010 to March 31, 2011).

9. CPG Solutions, LLC ('CPG') is a wholly owned subsidiary of KPIT US. CPG, an Oracle Gold Partner, is a focused player in solutions for companies in Manufacturing, Supply Chain and Engineering space with over a decade of specialized consulting experience in this focused area. CPG reported a profit of Rs 102.84 Million for the year ended March 31, 2012 (previous period a profit of Rs 46.61 Million) on revenues of Rs 997.86 Million (previous period Rs 337.21 Million). (Previous period's figures are for post acquisition period i.e. October 1, 2010 to March 31, 2011).

10. KPIT (Shanghai) Software Technology Co., Ltd. (KPIT China) is a China based wholly owned subsidiary of the Company incorporated on January 12, 2011. KPIT China is formed to provide software development and consultancy to customers in China. During the Financial year 2011-12, KPIT China reported a loss of Rs 8.88 Million on revenues of Rs 3.87 Million.

11. KPIT Infosystems Netherlands B.V. (KPIT Netherlands) is a wholly owned subsidiary of the Company based in the Netherlands and was incorporated on February 16, 2012. KPIT Netherlands is yet to commence its commercial operations.

12. KPIT Infosystem (Brasil) Servicos De Technologiae Participacoes Ltda (KPIT Brazil) is a wholly owned subsidiary of the Company based in Brazil and incorporated on March 6, 2012. KPIT Brazil is yet to commence its commercial operations.

13. SYSTIME Global Solutions Private Limited (SYSTIME) is one of the world's largest J D Edwards solution provider and Oracle Platinum partner. The Board of Directors of the Company, at their meeting held on May 24, 2011 had approved the proposal of investment in SYSTIME over a period of time. The Company has accordingly invested 57.5% in the shareholding of SYSTIME during FY2012. The objective of the investment in SYSTIME is to make a foray in the ERP space and thereby leverage Oracle relationship. J D Edwards is the leading ERP for certain Industry verticals including manufacturing, which is also the Company's largest vertical. As on March 31, 2012, SYSTIME has ten subsidiaries (including step down subsidiaries). SYSTIME (consolidated) reported a profit of Rs 51.66 Million for the period ended March 31, 2012 on revenues of Rs 688.05 Million. (Figures of revenue and profit have been taken into consideration for the period January 1, 2012 till March 31, 2012 i.e. post SYSTIME becoming a subsidiary of the Company).

Particulars required as per Section 212 of the Companies Act, 1956 As per Section 212 of the Companies Act, 1956, a holding Company is required to attach the Directors' Report, Balance Sheet and Profit and Loss Account of all the subsidiaries. However the Government of India vide General Circular No: 2 /2011 has given a general exemption to the companies from attaching the Annual Reports of subsidiaries provided certain conditions are fulfilled. Accordingly, this Annual Report does not contain the financial statements of the subsidiaries. Statement pursuant to Section 212 of the Companies Act, 1956, is given elsewhere in this Annual Report. The Company will make available the audited annual accounts and related detailed information of the subsidiary companies, where applicable, upon request by any member of the Company. The Company will also upload the accounts of the individual subsidiaries on its official website. These documents will also be available for inspection during business hours at our registered office.

Directors

Pursuant to Article 72 of the Articles of Association of the Company read with Section 256 of the Companies Act, 1956, Mr. S. B. (Ravi) Pandit and Ms. Lila Poonawalla retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Mr. Sudheer Tilloo, Director, who is liable to retire by rotation, at the ensuing Annual General Meeting, has expressed unwillingness to be re-appointed as Director of the Company.

During the year, Mr. Sachin Tikekar was appointed as a Whole-time Director for a period of 5 years with effect from October 20, 2011. Mr. Sachin Tikekar is a founding member of the Company and has played various leadership roles over the years. Prior to assuming the role of Chief of People Operations, Mr. Sachin Tikekar was the Chief Operating Officer of the US operations of the Company, and was instrumental in building the Company's sales presence across US, Asia and Europe. Mr. Sachin Tikekar has a Masters degree in Strategic Management and International Finance from Temple University's Fox School of Business and Management, Pennsylvania, USA.

Mr. Dwayne Allen, alternate director to Ms. Elizabeth Carey, resigned from the directorship of the Company with effect from February 18, 2012. Mr. Dinesh Castellino, alternate director to Mr. Bruce Carver, resigned from the directorship of the Company with effect from April 30, 2012. The Company has immensely benefited from the expert professional guidance of Mr. Dwayne Allen and Mr. Dinesh Castellino. The Board places on record its sincere appreciation for all the help and guidance provided by Mr. Dwayne Allen and Mr. Dinesh Castellino during their tenure as Directors of the Company.

Auditors

The Statutory Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re-appointed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed to this Annual Report. The Auditors' Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, a statement showing the names and other particulars of employees forms a part of this report. However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Responsibility Statement of the Board of Directors

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

i) in the preparation of the accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed and there has been no material departure;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the profit of the Company for the said financial year;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the year ended March 31, 2012 on a "going concern" basis.

Employees Stock Option Plan (ESOP)

Information relating to stock option programme of the Company is provided in the Annexure I of this report. The information is being provided in compliance with Clause 12 of the 'Disclosure in the Directors' Report of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

Fixed Deposits

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988

Conservation of Energy - Our Company's primary business being Software services, our operations are conducted with energy conservation as a focus area. The Company has taken various initiatives for optimum utilization and conservation of resources. Some of the initiatives taken by the Company are as follows:

1. Energy Conservation measures:

In Electricity consumption the Company stands at 170 KWH/ sqmt/yr as against the industry standard of 220 (published by NASSCOM). The facility at Hinjawadi Pune reflects KPIT's commitment to energy efficiency and "Green Growth". The features incorporated in building design are as follows:

a. Buildings are clad with Clay Tiles, which prevent the ingress of heat inside the building, thus reducing the heat load and consequently, lessen load on AC.

b. Facility is built in such a way where in we make maximum use of natural light thus saving energy. Internal gardens make the facility cooler which helps in reducing dependency on AC.

c. Internal lighting is integrated with occupancy sensors which reduces the energy consumption.

d. AC system installed is of VRF technology which facilitates in the control of local cooling thus resulting in considerable saving vis-a-vis a conventional central AC system. The facility has won the Emerson Cup GOLD Award for the Lowest Energy Consumption in India and South East Asian Countries.

e. Installation of Ozonized air purification system has considerably reduced load on AC system.

2. Two Six Sigma Green Belt projects completed on minimizing wastage in energy consumption for Pune Facility which has resulted in 15% savings.

3. Various steps have been undertaken to utilize the energy in an optimum manner like:

a. All lights replaced with CFL;

b. Lift lights replaced with LEDs;

c. Correction done to capacitor bank to achieve 1.0 power factor to minimize the power losses;

d. Shutting down UPS at night and on weekends;

e. Defined AC working hours and temperatures to suit seasonal changes;

f. Optimization of LUX level in working areas by removing extra lights;

g. Changing over to LED lamp projectors.

4. PC Shut Down Drive undertaken to shut down PCs during non working hours resulting into considerable reduction in energy consumption.

5. Computer hardware:

i. Ratio of per employee hardware reduced from 1.35 to 1.15 within the last 3 years.

ii. VDI deployment will increase life of old PCs.

iii. Thin client has got more life compared to PCs resulting in less consumption and waste generation in future.

6. Water Conservation measures:

The Company's Hinjawadi site has reduced its water consumption by 26% over the last three years. This is largely attributable to the following measures taken by the Company:

1. Hydro pneumatic system of water supply installed there by ensuring minimum wastage of water.

2. Almost 1.2 lakh litres of recycled water generated through Sewage treatment plant used for gardening purpose.

3. Control over water usage for Housekeeping activities.

7. Environment Improvement initiatives:

1. Tree plantation: Initiated within and outside the premises.

2. Vermi Compost Plant: A vermi compost plant has been set up for treating the organic waste, which generates 3,500 kg vermin compost manure every year.

3. Recycling or disposal of E-waste through authorized vendor.

4. Employee Transport: Various steps taken in employee transport to reduce fuel consumption such as:-

a. Control on unscheduled cab requirements thereby ensuring optimum seat utilization. This has resulted in achievement and utilization of 3.70 seats out of 4.i.e. 92%

b. Use of buses in lieu of cabs as well as optimization done through grouping and route selections achieving 95% occupancy.

c. Other operational control activities like vehicle check- ups, drivers training etc.

Occupational Health and Safety Assessment Services (OHSAS):-

The Company's Hinjawadi site was successfully certified for ISO 14001:2004 (Environmental Management System) & OHSAS 18001:2007 standards in July 2011. We are proud to mention that these certifications were won on the basis of independent efforts and without any external consultancy. The concerned functions have put in substantial efforts for a considerable period of time to obtain these certifications. The Company has won a number of accolades from various client audit teams since the certification.

Research and Development (R & D) Activities:-

The Company has been laying thrust on Research & Development activities for the past few years. The Company has formed its own R&D center called 'Center for Research in Engineering Sciences and Technology' or CREST. A separate section on R&D activities undertaken by the Company, forms a part of this report.

Technology Absorption - The Company is in the forefront of deploying leading edge technology while partnering with leading vendors in the IT domain. During the year, the Company successfully deployed private cloud, virtual desktop infrastructure and brought in work place flexibility and scalability. Amongst many other initiatives, the Company has deployed Digital Media System to communicate with employees across locations. The Company focuses on using these technologies for its own use as well as creating showcase for customers.

Foreign Exchange Earnings and Outgo - The Company focuses on exports and undertakes all possible efforts to expand its presence in the export markets. Total foreign exchange earnings during the year have been Rs 5,158.17 Million (previous year Rs 4,554.63 Million) and foreign exchange outgo has been Rs 434.56 Million (previous year Rs 555.23 Million).

Awards/Recognition

- Mr. Anil Patwardhan, VP and Head Corporate Finance & Governance was awarded with "Recognition of Excellence" at CFO India's 2nd Annual CFO 100 Roll of Honour. He received the award for "Winning edge - in Mergers & Acquisitions."

- KPIT Cummins was awarded with the 2011 Wall Street Journal Innovation Award in the 'Transportation' category. The award recognizes KPIT Cummins' commitment to advancing green and sustainable technology for automobiles.

- SAP honored KPIT Cummins with SAP ACE Awards 2011 "BEST - RUN End to End Business Process". The award reflects KPIT Cummins' commitment to run business on smart and efficient systems that help deliver higher value to customers and employees.

- KPIT Cummins was awarded the EMC Cloud Pioneer Award 2011, for early adoption, coverage, size and maturity of cloud deployment at KPIT Cummins.

- Mr. Shrikant Kulkarni, Chief Information Officer was selected amongst the Top Fifty CIOs in the country. This was announced by CIO association of India in January 2012.

- In Automotive SBU, KPIT received the 'Best Paper' award for 'Fast and Accurate GHT (Generalized Hough Transform)' in ICoMec 2011 conference.

- The Company was shortlisted amongst the three finalists at the Bloomberg UTV CXO Awards 2011 in the "Best Innovative Use of Information Technology - Large Enterprise" category.

- KPIT Cummins won the 2012 SAP® North American Partner Impact Award for Momentum and we have been recognized by SAP as fastest growing System Integrator in North America - moved up from rank #49 in 2010 to #8 in 2011.

Acknowledgments

Your Directors take this opportunity to thank all the members and investors of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, HDFC Bank Ltd., The Hongkong and Shanghai Banking Corporation Ltd, Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd. and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. and also thank all the employees of the Company for their valuable contribution in the growth of the Company.

We also thank the Governments of United States of America, United Kingdom, Germany, France, Japan, Singapore, South Korea, South Africa, China, the Netherlands and Brazil. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bengaluru, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges (where our shares are listed), Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

By Order of the Board of Directors

For KPIT Cummins Infosystems Limited

S. B. (Ravi) Pandit

Pune, April 30, 2012 Chairman & Group CEO


Mar 31, 2011

The Directors are pleased to present the Twentieth Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2011.

Performance of the Company

Particulars Standalone Consolidated 2010-2011 2010-2011

USD Rs. USD Rs. Million Million Million Million

Total Sales and Income 117.96 5,385.55 224.07 10,230.14

Total Expenses 92.37 4,217.22 190.73 8,708.06

PBDIT 25.59 1,168.33 33.34 1,522.08

Profit/(Loss) before Tax (PBT) 17.29 789.43 24.15 1,102.58

Profit/(Loss) after Tax (PAT) 15.22 694.88 20.72 945.82

Profit Available for appropriation 15.22 694.88 20.72 945.82

Result of Operations

There was a turnaround in the fiscal 2010-2011 for the IT industry and the economy at large and the Company has witnessed the effects of the same. With an improvement in the Revenue growth over the last fiscal the Company has progressed substantially as reported herein below.

Total consolidated revenue for the fiscal year 2010-11 (FY11) was Rs. 10,230.14 Million. Gross Profit and Earnings before interest, tax, depreciation and amortization (EBITDA) are Rs. 3,630.80 Million and Rs. 1,522.08 Million, respectively. Gross profit margin stands at 36% of the revenue. Net profit after tax grew by 10.32% to Rs. 945.82 Million.

The revenues for the year on a consolidated basis in USD terms are USD 224.07 Million as against USD 153.76 Million during the previous year. Average realization rate was Rs. 45.66 per US Dollar.

Standalone revenue for the fiscal year 2010-11 (FY11) was Rs. 5,385.55 Million. Gross profit stands at Rs. 2,033.59 Million. Net profit after tax decreased by 11.42% to Rs. 694.88 Million.

Transfer to Reserves

Your Directors propose to transfer Rs. 70 Million to the General Reserve. An amount of Rs. 594.10 Million is proposed to be retained in the Profit & Loss Account.

Your Directors propose to transfer an amount of Rs. 10 Million towards KPIT Cummins Infosystems Limited Community Foundation Reserve. This Reserve would be utilized for various community benefit schemes as may be approved by the Management.

Your Directors propose to transfer an amount of Rs. 100 Million towards KPIT Cummins Technology Fund. This fund would be utilized to drive high end innovative technology initiatives for promoting green growth and energy conservation, which will successively benefit the Company.

Your Directors propose to transfer an amount of Rs. 100 Million towards KPIT Employees’ Welfare Fund. This Fund would be utilized to promote welfare of its employees in various forms such as Medical, Education, Housing, Holiday homes, Recreation facilities, Activities related to Sports, Music Research, Artistic Pursuits etc.

Dividend

The Directors are pleased to recommend a dividend @ 35% (Rs. 0.70) per equity share of face value of Rs. 2/- each on the paid-up equity share capital of the Company.

Share Capital

Warhol Limited (Warhol) (an affiliate of ChrysCapital) is a Mauritius based, Foreign Institutional Investor. Warhol was issued 77,58,621 equity shares on preferential basis for an aggregate consideration of Rs. 112 crores, in terms of the Special Resolution passed by the shareholders of the Company in the Extra-Ordinary General Meeting held on February 8, 2011. The shares were issued at a price of Rs. 145/- . The proceeds of the issue will be utilized for bona fide business purposes and for funding the growth and operations of the Company and/or its subsidiaries, to meet the working capital and capital expenditure requirements of the Company/subsidiaries and for investment in subsidiaries and joint ventures. The shares were allotted to Warhol on February 17, 2011. Warhol currently holds approximately 8.83% of the paid up share capital of the Company.

The Company allotted 1,581,753 equity shares of Rs. 2/- each, to the employees under the ESOP schemes in the financial year 2010-11.

The outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2011 is Rs. 175,726,830 consisting of 87,863,415 equity shares of Rs. 2/- each.

Manpower Strength

The Company had 6,514 employees as on March 31, 2011. During the year there was a net addition of 1,596 employees, which increased the employee strength by 32% over the previous year.

CRISIL Ratings

CRISIL has confirmed the financial credit rating of AA-/ stable for the revised bank limits of Cash Credit and Term Loan facilities and P1+ for Bank Guarantee & Letter of Credit, for the Company.

Quality

The Company is highly committed to International standards raised by the Industry. The Company has been awarded ISO 9001:2008 (Quality Management Systems), ISO 27001:2005 (Information Security Management Systems), ISO 20000:2005 (Information Technology Service Management) and BS25999:2007 (Business Continuity Management) certificates by TUV Nord Cert GmbH for providing Software Development, Product Engineering, Product Support and Enabling Services.

Institutional Holding

As on March 31, 2011, the Institutional Holding in the Company was 28.70% of the listed capital. This excludes the following

(i) approximately 8.88% held by Warhol Limited, (ii) approximately 0.67% held by International Finance Corporation, (iii) approximately 1.68% held by Cargill Mauritius Limited (CML). Including the aforementioned three shareholders, total institutional holding as on March 31, 2011 stood at 39.93%.

Information about the Subsidiary Companies

As on March 31, 2011 the Company had nine operational subsidiaries:

1. KPIT Infosystems Inc. (KPIT US) was incorporated in 1998, in the US, for catering to the demand of US based customers. The Company holds 100% of the share capital and voting power of KPIT US. KPIT US earned revenues of Rs. 3,763.04 Million (previous year Rs. 3,483.74 Million) and recorded a loss of Rs. 32.16 Million (previous year profit of Rs. 12.60 Million) ended on March 31, 2011. The loss above does not include translation loss of Rs. 32.97 Million.

2. KPIT Infosystems Limited (KPIT UK) was incorporated in 1996, in UK, for catering to the demand of customers based out of UK & Europe. The Company holds 100% of the share capital and voting power of KPIT UK. During the year, KPIT UK has earned revenues of Rs. 788.33 Million (previous year Rs. 872.60 Million) and registered a loss of Rs. 17.04 Million (previous year loss of Rs. 6.64 Million). The loss above does not include translation loss of Rs. 19.39 Million.

3. KPIT Infosystems GmbH (KPIT Germany) was added as a step down subsidiary in 2005. KPIT Germany is a 100% subsidiary of KPIT UK. This subsidiary is completely focused on huge automotive market in Germany to expand our customer base in this segment with a vision to become No. 1 global product engineering partner to the automotive industry. KPIT Germany reported a profit of Rs. 16.36 Million for the year ended March 31, 2011 (previous year a loss of Rs. 18.04 Million) on revenues of Rs. 555.45 Million (previous year Rs. 503.44 Million).

4. KPIT Infosystems Inc. [a.k.a. SolvCentral.com Inc.] (SolvCentral), based in US was added as a step down subsidiary in 2005 when KPIT US acquired 90% of its shares. SolvCentral is a 100% subsidiary of KPIT US. SolvCentral is focused in the Business Intelligence (BI) space in the US market. SolvCentral reported a loss of Rs. 27.17 Million during the year ended March 31, 2011 (previous year loss of Rs. 0.66 Million) with revenues of Rs. 74.84 Million (previous year Rs. 128.90 Million).

5. KPIT Infosystems France SAS (KPIT France) was formerly known as Pivolis. KPIT France has provided direct presence in France which is an important market in European region from KPIT’s growth perspective. In the Financial year 2010-11 KPIT France reported a profit of Rs. 1.22 Million during the year (Previous year a profit of Rs. 6.13 Million) with revenues of Rs. 325.99 Million (previous year Rs. 341.97 Million).

6. Sparta Consulting Inc. (Sparta Inc.) was added as a step down subsidiary in 2009, when KPIT US acquired 100% of its shares. Sparta Inc. is a leading provider of high end SAP solutions and is one of the fastest growing SAP consultancies in North America. Sparta Inc. (consolidated) reported a profit of Rs. 234.20 Million during the year ended March 31, 2011 (previous period profit of Rs. 29.85 Million) on revenues of Rs. 2,691.72 Million (previous period Rs. 578.70 Million).

7. Sparta Infotech India Private Limited (Sparta India), was a

subsidiary of Sparta Inc. Consequent upon the acquisition of 100% shares of Sparta Inc., by KPIT US, Sparta India is now a subsidiary of KPIT US. Sparta India was incorporated to cater Sparta’s India based clientele. Sparta India reported a profit of Rs. 111.22 Million during the year ended March 31, 2011 (previous period profit of Rs. 3.46 Million) on revenues of Rs. 304.73 Million (previous period Rs. 50.29 Million).

8. In2Soft GmbH (In2Soft) is based in Munich, Germany, whose 74% share capital was acquired by KPIT Germany on October 1, 2010. The fixed consideration payable for acquisition of ln2Soft is Euro 2.5 Million. In2Soft is an expert in diagnostics and telematics for the automotive industry. In2Soft develops the OBU software for the tolling systems in Germany, Europe and world- wide and provides with VisualODX, a modern and complete tool set for vehicle diagnostics. The objective of the acquisition was to have productized solutions for global automotive customers and to have an onsite German presence to potentially serve strategic automotive customers in Germany. ln2Soft reported a profit of Rs. 7.33 Million during the period ended March 31, 2011 on revenues of Rs. 99.19 Million. (ln2softs figures of revenue and profit have been taken into consideration for post acquisition period i.e. after October 1, 2010 till March 31, 2011).

9. CPG Solutions, LLC (CPG’) is based in Florida, USA. KPIT US, the Company’s wholly owned subsidiary in USA, acquired 100% shares in CPG. CPG became wholly owned subsidiary of KPIT US with effect from October 1, 2010. The total consideration payable for acquisition of CPG is USD 13.2 Million. CPG, an Oracle Gold Partner, is a focused player in solutions for companies in Manufacturing, Supply Chain and Engineering space with over a decade of specialized consulting experience in this focused area. The acquisition of CPG will strengthen the Company’s strategic position as preferred Oracle partner for manufacturing companies and is designed to complement the Company’s strengths in global ERP roll outs, implementation and support and maintenance services. CPG reported a profit of Rs. 46.61 Million during the period ended March 31, 2011 on revenues of Rs. 337.21 Million. (CPGs figures of revenue and profit have been taken into consideration for post acquisition period i.e. after October 1, 2010 till March 31, 2011).

Companies ceasing to be subsidiaries:

KPIT Infosystems Central Europe Sp. Z.o.o. (KPIT Poland’) and KPIT Cummins Global Business Solutions Limited (KPIT GBS’): The Hon’ble High Court of Judicature at Mumbai passed the merger order and approved the Scheme of amalgamation of KPIT Infosystems Central Europe Sp. Z.o.o., Poland (KPIT Poland) and KPIT Cummins Global Business Solutions Limited (KPIT GBS’) with the Company on January 28, 2011. The effective date of merger of KPIT Poland and KPIT GBS with the Company was March 1, 2011.

The operations of KPIT Poland were not commercially viable to run as a separate company, since its major customer had merged with another company. Hence it was decided to merge the same with the Company and close KPIT Poland’s operations as per the Polish laws.

KPIT GBS was engaged in BPO activity and achieved its operational breakeven in FY10. Consolidation of the operations of KPIT GBS with the Company was aimed at improving operational efficiencies.

Particulars required as per Section 212 of the Companies Act, 1956

As per Section 212 of the Companies Act, 1956, a holding Company is required to attach the Directors Report, Balance Sheet and Profit and Loss Account of all the subsidiaries. However the Government of India vide General Circular No: 2 /2011 has given a general exemption to the companies from attaching the annual reports of subsidiaries provided certain conditions are fulfilled. Accordingly, this annual report does not contain the financial statements of the subsidiaries. Statement pursuant to Section 212 of the Companies Act, 1956, is given elsewhere in this annual report. The Company will make available the audited annual accounts and related detailed information of the subsidiary companies, where applicable, upon request by any member of the Company. The Company will also upload the accounts of the individual subsidiaries on its official website. These documents will also be available for inspection during business hours at our registered office.

Directors

Pursuant to Article 72 of the Articles of Association of the Company read with Section 256 of the Companies Act, 1956, Dr. R. A. Mashelkar, Mr. Bruce Carver and Ms. Elizabeth Carey retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. Girish Wardadkar, President and Executive Director resigned from the directorship of the Company with effect from April 25, 2011 after a tenure of 6 years with the Company. Mr. Girish Wardadkar has been instrumental in establishing strong systems with a focus on improving quality and productivity. He has also contributed significantly in building reporting and control systems. The Board places on record its sincere appreciation for his tremendous contribution towards the growth and success of the Company over the years.

Mr. Deepak Malik resigned from the directorship of the Company with effect from April 25, 2011. The Company has immensely benefitted from the expert professional guidance of Mr. Deepak Malik. The Board places on record its sincere appreciation for all the help and guidance provided by him.

Auditors

The Statutory Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re- appointed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed to this annual report. The Auditors Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Responsibility Statement of the Board of Directors

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

i) in the preparation of the accounts for the financial year ended March 31, 2011, the applicable accounting standards have been followed and there has been no material departure;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the profit of the Company for the said financial year;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the year ended March 31, 2011 on a going concern’ basis.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, a statement showing the names and other particulars of employees forms a part of this report. However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report

excluding the aforesaid statement is being sent to all the members of the Company. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Employees Stock Option Plan (ESOP)

Information relating to stock option programme of the Company is provided in the Annexure I of this report. The information is being provided in compliance with Clause 12 of the Disclosure in the Directors’ Report of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

Fixed Deposits

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Conservation of Energy - Our Company’s primary business being Software services, our operations are conducted with energy conservation as a focus area. The Company has taken various initiatives for optimum utilization and conservation of resources. Some of the initiatives taken by the Company are as follows:

1. Energy Conservation measures:

The facility at Hinjawadi Pune reflects KPITs commitment to energy efficiency and "Green Growth”. The features incorporated in building design are as follows:

a. Buildings are clad with Clay Tiles, which prevent the ingress of heat inside the building, thus reducing the heat load and consequently, lessen load on AC.

b. Facility is built in such a way wherein we make maximum use of natural light thus saving energy. Internal gardens make the facility cooler which helps in reducing dependency on AC.

c. Internal lighting is integrated with occupancy sensors which reduces the energy consumption.

d. AC system installed is of VRF technology which facilitates in the control of local cooling thus resulting in considerable saving vis-a-vis a conventional central AC system. The facility has won the Emerson Cup GOLD Award for the Lowest Energy Consumption in India and South East Asian Countries.

e. Installation of Ozonized air purification system has considerably reduced load on AC system.

2. Two Six Sigma Green Belt projects completed on minimizing wastage in energy consumption for Pune Facility which has resulted in 15% savings.

3. Various steps have been undertaken to utilize the energy in an optimum manner like:

a. All lights replaced with CFL;

b. Lift lights replaced with LEDs;

c. Correction done to capacitor bank to achieve 1.0 power factor to minimize the power losses;

d. Shutting down UPS at night and on weekends;

e. Defined AC working hours and temperatures to suit seasonal changes;

f. Optimization of LUX level in working areas by removing extra lights;

g. Changing over to LED lamp projectors.

4. PC Shut Down Drive undertaken to shut down PCs during non working hours resulting into considerable reduction in energy consumption.

Water Conservation measures:

1. Hydro pneumatic system of water supply installed there by ensuring minimum wastage of water.

2. Recycled water generated through Sewage treatment plant used for gardening purpose.

Environment Improvement initiatives:

1. Tree plantation: Initiated within and outside the premises.

2. Vermi Compost Plant: A vermi compost plant has been set up for treating the organic waste, which generates organic manure.

3. Employee Transport: Various steps taken in employee transport to reduce fuel consumption such as:

a. Control on unscheduled cab requirements thereby ensuring optimum seat utilization.

b. Use of buses in lieu of cabs.

Research and Development (R & D) Activities -

The Company has been laying thrust on Research & Development activities for the past few years. The Company has formed its own R&D center called Center for Research in Engineering Sciences and Technology’ or CREST. A separate section on R&D activities undertaken by the Company, forms a part of this report.

Technology Absorption - The Company is constantly upgrading its technological excellence through its Infrastructure, Technology and Services (ITS) function. The Company has started building partnerships with leading technology vendors like Microsoft, SAP, Oracle, HP, IBM and VMware. Through these partnerships the Company has the advantage to create and build technical solutions for its customers and for its own consumption. The Company focuses on using the technology for its own use as well as creating showcase for customers.

Foreign Exchange Earnings and Outgo - The Company focuses on exports and undertakes all possible efforts to expand its presence in the export markets. Total foreign exchange earnings during the year have been Rs. 4,632.95 Million (previous year Rs. 3,714.09 Million) and foreign exchange outgo has been Rs. 633.55 Million (previous year Rs. 613.96 Million).

Awards/Recognition

- KPIT Cummins was awarded the Economic Times Zigwheels Automotive Idea of the Year Award’ for 2010, for its intelligent plug-in parallel hybrid solution, REVOLO.

- NASSCOM has awarded the Promising Innovation of the Year, 2011’ Award to KPIT Cummins for REVOLO. This award is an acknowledgement of KPIT’s commitment to fostering automotive technology innovation.

- KPIT Cummins’ REVOLO was also awarded Best Electronic Product of the Year 2011’ at Indian Semiconductor Association Technovation event. This award completes the hat-trick for REVOLO.

- KPIT Cummins has also won the global Cummins Chairman’s Quality Award’ in Six-Sigma which has the top most recognition for Six Sigma in the Cummins family.

- Our Chairman & Group CEO, Mr. Ravi Pandit was recently felicitated with Vocational Excellence Award’ of the Rotary Club of Pune, for his vision and excellence in the field of profession and business. He received the award from noted scientist and innovation evangelist, Dr. Raghunath Mashelkar.

- Mr. Anil Patwardhan, our CFO was honored with the CFO in Information Technology Sector’ Award by the Institute of Chartered Accountants of India (ICAI) for exceptional performance and achievements as CFO in the Information Technology category for 2010.

- KPIT Cummins’ REVOLO won a special recognition award for exceptional leadership in catalyzing consumer adoption of sustainable solutions, at the India Carbon Outlook’s Parivartan Sustainability Leadership Awards, March 2011.

- KPIT Cummins’ REVOLO has been selected as a winner in the knowledge@Wharton Innovation tournament in the Sustainable implemented Solution’ category, April 2011.

Acknowledgments

Your Directors take this opportunity to thank all the members and investors of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, International Finance Corporation, HDFC Bank Ltd., The Hongkong and Shanghai Banking Corporation Ltd., Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd. and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. and also thank all the employees of the Company for their valuable contribution in the growth of the Company.

We also thank the Governments of United States of America, United Kingdom, Germany, France, Poland, Japan, Singapore, South Korea, South Africa and China. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bengaluru, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges (where our shares are listed), Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.



By Order of the Board of Directors For KPIT Cummins Infosystems Limited

S. B. (Ravi) Pandit Chairman & Group CEO



Pune, April 25, 2011


Mar 31, 2010

The Directors are pleased to present the Nineteenth Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2010.

Performance of the Company

Particulars Standalone Consolidated 2009-2010 2009-2010

USD Rupees USD Rupees Million Million Million Million

Total Sales and Income 90.19 4,270.45 154.52 7,316.41

Total Expenses 62.30 2,949.86 120.42 5,701.97

PBDIT 27.89 1,320.58 34.10 1,614.43

Profit/(Loss) before Tax (PBT) 19.04 901.73 21.68 1,026.45

Profit/(Loss) after Tax (PAT) 16.57 784.50 18.11 857.31

Profit Available for appropriation 16.57 784-50 18-11 857.31

Result of Operations

The global meltdown has made a significant impact on the growth of the IT industry and the economy at large and KPIT is no exception to this. Revenue growth in the fiscal has declined, with total sales in revenue terms being comparatively lower than previous year. Due to the global meltdown, like other IT companies, the Company also decided to shift its onsite operations to offshore. The change in this business model, resulted into a decline in revenues. However the total volume of business and the number of employees working on the projects have remained almost same as previous year. The Company has managed to sustain its trend of growth in profits. In light of the same, the result of operations is reported herein below.

Total consolidated revenue for the fiscal year 2009-10 (FY10) was Rs. 7,316.41 Million. Gross Profit and Earnings before depreciation, interest and tax (EBITDA) are Rs.3,225.91 Million and Rs.1,614.43 Million, respectively. Gross profit margin improved by 0.41 % to 44.1 % of the revenue. Net profit after tax grew by 30.19% to Rs.857.31 Million.

The revenues for the year on a consolidated basis in USD terms are USD 154.52 Million as against USD 174.10 Million during the previous year. Average realization rate was Rs. 47.35 per US Dollar.

Standalone revenue for the fiscal year 2009-10 (FY10) was Rs. 4,270.45 Million. Gross profit is at Rs.1,945.55 Million. Net profit after tax grew by 24.98% to Rs.784.50 Million.

Transfer to Reserves

We propose to transfer Rs. 79 Million to the General Reserve. An amount of Rs. 704.21 Million is proposed to be retained in the Profit 6 Loss Account.

Dividend

The Directors are pleased to recommend a dividend @ 35% (Rs. 0.70) per equity share of face value of Rs. II- each on the paid-up equity share capital of the Company.

Share Capital

The Company allotted 480,080 equity shares of Rs. II- each, to the employees under the ESOP schemes in the financial year 2009-10.

The outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2010 is 78,523,041 shares (of Rs. II- each).

Manpower Strength

The Company had 4,918 employees as on March 31, 2010. During the year there was a net addition of 1,719 employees. The employee strength increased by 5.9% over the previous year.

CRISIL Ratings

CRISIL has confirmed the financial credit rating of AA-/ Stable for the revised bank limits of Cash Credit and Term Loan facilities and P1+ for Bank Guarantee & Letter of Credit for the Company.

Quality

The Company is highly committed to security standards raised by the Industry. The Company has been awarded 9001:2008 and 27001:2005 certificates by TUV Nord Cert GmbH, for providing Software Development, Product Engineering, Product Support, etc.

Institutional Holding

As on March 31, 2010, the institutional holding in the Company was 22.88%. This excludes the following (i) approximately 4.54% held by LB India Holdings Mauritius II Limited, an affiliate of Lehman Brothers, US and its PAC, (ii) approximately 1.98% held by International Finance Corporation, Washington, and (iii) approximately 1.87% held by Cargill Mauritius Limited (CML). Including the aforementioned three shareholders, total institutional holding as on March 31, 2010 stood at 31.27%.

Information about the Subsidiary Companies

As on March 31, 2010 the Company had nine subsidiaries:

1. KPIT Infosystems Inc. (KPIT US) was incorporated in 1998, in the US, for catering to the demand of US based customers. The Company holds 100% of the share capital and voting power of KPIT US. KPIT US earned revenues of Rs. 3,483.74 Million (previous year Rs. 4,139.90 Million) and recorded a profit of Rs.12.60 Million (previous year profit of Rs. 40.99 Million) ended on March 31, 2010.

2. KPIT Infosystems Limited (KPIT UK) was incorporated in 1996, in UK, for catering the demand of customers based out of UK & Europe. The Company holds 100% of the share capital and voting power of KPIT UK. During the year, KPIT UK has earned revenues of Rs. 872.60 Million (previous year Rs. 1,170.40 Million) and registered a loss of Rs.6.64 Million (previous year profit of Rs. 9.53 Million).

3. KPIT Cummins Global Business Solutions Limited (KPIT GBS)

was incorporated in 2005 as a wholly owned subsidiary of the Company in India for rendering business process outsourcing and other business solutions. KPIT GBS specializes in providing BPO/KPO services and consulting in Governance & Regulatory Compliance. KPIT GBS reported a profit of Rs. 145.66 Million for the year ended March 31, 2010 (previous year a loss of Rs. 74.41 Million) on revenues of Rs. 516.64 Million (previous year Rs. 486.40 Million).

4. KPIT Infosystems GmbH (KPIT Germany) was added as a step down subsidiary in 2005. In the financial year 2009-10, KPIT UK acquired the balance shareholding of 40% in KPIT Germany. KPIT Germany is now a 100% subsidiary of KPIT UK. This subsidiary is completely focused on huge automotive market in Germany to expand our customer base in this segment with a vision to become No. 1 global product engineering partner to the automotive industry. KPIT Germany reported a loss of Rs. 18.04 Million for the year ended March 31, 2010 (previous year a profit of Rs. 5.49 Million) on revenues of Rs. 503.44 Million (previous year Rs. 651.97 Million).

5. KPIT Infosystems Inc. [a.k.a. SolvCentral.com Inc.] (SolvCentral),

based in US was added as a step down subsidiary in 2005 when KPIT US acquired 90% of its shares. In the financial year 2009-10, KPIT US acquired the balance shareholding of 10% in SolvCentral. SolvCentral is now a 100% subsidiary of KPIT US. SolvCentral is focused in the Business Intelligence (Bl) space in the US market. SolvCentral reported a loss of Rs. 0.66 Million during the year ended March 31, 2010 (previous year loss of Rs. 3.54 Million) with revenues of Rs. 128.90 Million (previous yearRs. 187.52 Million).

6. KPIT Infosystems France SAS (KPIT France) was formerly known as Pivolis. KPIT France has provided direct presence in France which is an important market in European region from KPITs growth perspective. In the Financial year 2009-10 KPIT France reported a profit of Rs. 6.13 Million during the year (Previous year a profit of Rs. 12.64 Million) with revenues of Rs. 341.97 Million (previous year Rs. 345.96 Million).

7. KPIT Infosystems Central Europe Sp.z o.o., (KPIT Poland),

was promoted by the Company as its wholly owned subsidiary in Poland in August 2006. KPIT Poland is providing near shore centre to the customers based out of Europe, who are looking forward to outsourcing from India based service providers. KPIT Poland reported a loss of Rs. 5.52 Million during the year ended March 31, 2010 (previous year loss of Rs. 23.26 Million) on revenues of Rs. 33.15 Million (previous year Rs. 55.73 Million).

8. Sparta Consulting Inc. (Sparta Inc.) merged into KPIT US on October 30, 2009 and is now a wholly owned subsidiary of KPIT US. The total consideration for merger of Sparta Inc., with KPIT US is upto USD 38 Million to be paid in a phased manner. Sparta Inc., a California, US-based company and a leading provider of high end SAP solutions is one of the fastest growing SAP consultancies in North America. With the merger of Sparta Inc., the Companys business model will be further strengthened to focus more on select industries like Automotive and Industrials and achieve market leadership by creating best in class SAP practice. It would also help leverage the Companys global presence especially in Europe and Asia Pacific.

9. Sparta Infotech India Private Limited (Sparta India), was a

subsidiary of Sparta Inc. Consequent to the merger for Sparta Inc., with KPIT US, Sparta India is now a subsidiary of KPIT US. Sparta India was incorporated to cater Spartas India based clientele.

Sparta Inc. (consolidated) reported a profit of Rs. 29.85 Million during the period ended March 31, 2010 on revenues of Rs. 578.70 Million. (Spartas figures of revenue and Profit have been takeninto consideration for post-merger period i.e. after October 30, 2009 till March 31, 2010)

Particulars required as per Section 212 of the Companies Act, 1956

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors Report, Balance Sheet and Profit and Loss Account of all the above subsidiaries. The Company had applied to the Government of India for an exemption from such attachment as we present the audited consolidated financial statements in the annual report. We believe that consolidated financial statements present a full and fair picture of the state of affairs and the financial condition of a

company, and are accepted globally. Government of India has granted us an exemption from complying with Section 212(8) vide its letter dated March 17, 2010. Accordingly, this annual report does not contain the financial statements of these subsidiaries. Statement pursuant to Section 212 of the Companies Act, 1956, is given elsewhere in this Annual Report. The Company will make available the audited annual accounts and related detailed information of the subsidiary companies, where applicable, upon request by any member of the Company. The Company will also upload the accounts of the individual subsidiaries on its official website. These documents will also be available for inspection during business hours at our registered office.

Directors

Pursuant to Article 72 of the Articles of Association of the Company read with Section 256 of the Companies Act, 1956, Mr. Anant Talaulicar, Mr. Amit Kalyani and Dr. Srikant Datar retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. Girish Wardadkar was re-appointed as the President & Executive Director of the Company for a further period of five years with effect from January 19, 2010. Mr. Girish Wardadkars re-appointment as President 6 Executive Director is subject to the approval of the members of the Company in general meeting. A detailed profile of Mr. Girish Wardadkar forms part of the notice of this ensuing meeting, which is attached with this Annual Report.

Mr. K. V. Krishnamurthy resigned from the directorship of the Company with effect from January 18, 2010. The Company has immensely benefitted from the expert professional guidance of Mr. K. V. Krishnamurthy. The Board places on record its sincere appreciation for all the help and guidance provided by him.

Auditors

The Statutory Auditors, M/s. Deloitte Haskins 6 Sells, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re-appointed.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed to this annual report. The Auditors Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis, which forms a part of this Report.

Responsibility Statement of the Board of Directors

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

i) in the preparation of the accounts for the financial year ended March 31, 2010, the applicable accounting standards have been followed and there has been no material departure;

ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the profit of the Company for the said financial year;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the year ended March 31, 2010 on a going concern basis.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, a statement showing the names and other particulars of employees forms a part of this report. However, having regard to the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Employees Stock Option Plan (ESOP)

Information relating to stock option programme of the Company is provided in the Annexure I of this report. The information is being provided in compliance with Clause 12 of the Disclosure in the Directors Report of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

Fixed Deposits

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

Conservation of Energy - Our Companys primary business being- Software services, our operations are conducted with energy conservation as a focus area. The Company has taken various initiatives for optimum utilization and conservation of resources. Some of the initiatives taken by the Company are as follows:

1. Energy Conservation measures:

The facility at Hinjawadi Pune reflects KPITs commitment to energy efficiency and "Green Growth". The features incorporated in building design are as follows:

a) Buildings are clad with Clay Tiles, which prevent the ingress of heat inside the building, thus reducing the heat load and consequently, lessen load on AC.

b) Facility is built in such a way where in we make maximum use of natural light thus saving energy. Internal gardens make the facility cooler which helps in reducing dependency on AC.

c) Internal lighting is integrated with occupancy sensors which reduces the energy consumption.

d) AC system installed is of VRF technology which facilitates in the control of local cooling thus resulting in considerable saving vis-a-vis a conventional central AC system

e) Installation of Ozonized air purification system has considerably reduced load on AC system.

2. Two Six Sigma Green Belt projects completed on minimizing wastage in energy consumption for Pune Facility which has resulted in 15% savings.

3. Various steps have been undertaken to utilize the energy in an optimum manner like:

a) All lights replaced with CFL;

b) Lift lights replaced with LEDs;

c) Correction done to capacitor bank to achieve 1.0 power factor to minimize the power losses;

d) Shutting down UPS at night and on weekends;

e) Defined AC working hours and temperatures to suit seasonal changes;

f) Optimization of LUX level in working areas by removing extra lights;

g) Changing over to LED lamp projectors;

4. PC Shut Down Drive undertaken to shut down PCs during non- working hours resulting into considerable reduction in energy consumption.

Water Conservation measures:

1. Hydro pneumatic system of water supply installed there by ensuring minimum wastage of water.

2. Recycled water generated through Sewage treatment plant used for gardening purpose.

Environment Improvement initiatives:

1. Tree plantation: Initiated within and outside the premises.

2. Employee Transport: Various steps taken in employee transport to reduce fuel consumption such as:-

a) Control on unscheduled cab requirements thereby ensuring optimum seat utilization.

b) Use of buses in lieu of cabs

Research and Development (R 6 D) Activities - It has been 3 years since inception of our R&D center called Center for Research in Engineering Sciences and Technology or CREST. Every year CREST team has made significant contribution.

During the first year, we put focus on driver safety and image processing. The efforts put in the first year have now started paying off well in terms of concrete R&D projects from our customers.

In the second year, our focus was on High Performance Computing (HPC). In the second year itself we received a R 6 D project from power generation industry and we successfully solved the problem of load balancing based on our patented work in the High Performance Computing area.

This year, which is our third year, we started working in the cloud computing area. Our work on cloud computing along with HPC resulted in reduction of execution time for automotive crash simulation from 120 hours to only 12 hours, a savings of 90% in execution time! This resulted in customer delight and increased confidence that KPIT Cummins can do it.

Our significant research contribution this year includes unique design, development, and successful implementation of hybrid technology in a vehicle. The technology is so novel and unique that we have filed for 11 patents on this technology.

This year, the contribution to patents has been substantial. In one year, we have filed for 16 patents. With this new addition, we are glad that KPIT Cummins has reached a noteworthy milestone of 24 patents.

Client projects: Our research and development projects have continued to attract specialized customer projects and revenues throughout the year: An image processing-based manufacturing solution was delivered to one of our customers and a vision-based vehicle safety application is in the pipeline. To help us serve the increasing customer requirements, our carefully-grown expertise in Image Processing is being consolidated into an Image Processing Center of Excellence.

Last year, we reported Lab-on-Wheels, our experimentation platform for developing and testing embedded algorithms, with a successful demonstration of collision avoidance. We have expanded our range of applications in the development which includes:

1) Lane Departure warning System

2) Driver Status Monitoring

3) Around View system

High Performance Computing, Cloud Computing: We began R&D in the area of Cloud Computing, which is a promising new technology for cost-effective and pervasive computing.

Our work in parallel computing has resulted in significant reduction in execution time for automotive crash simulation. Initially the crash simulation software used to take 5 to 6 days to run. Our team parallelized the program to give dramatic 90% reduction in execution time.

Recognitions: Based on our successful technology demonstrations and strong connect with academic as well as research institutions, we received World Bank support through a soft loan of one million dollars for our R&D projects.

Nalanda and Budding Technologist Program: Nalanda is our International Student Internship Program. We hosted three students from France and the U.S. last year. The program continues to be popular as we receive more nominations than we can accommodate.

Budding technologist is an engineering student project program specifically meant for students in India. We have significantly expanded our collaboration with local institutions by interviewing 250 students, selecting about 100 students, and sponsoring 21 student projects at the Bachelors and Masters level. This partnership bore fruit in the form of tangible demonstrations, one patentable project, seven papers, and industry-aware students. Our subject matter experts also helped in building strong technical skills amongst students through presentations, student projects, paper reviews, and mentoring students.

TechTalk: TechTalk@KPITCummins is our quarterly technical journal. We are now in the third year of the journal. We continue to receive very good response from our readers as well as authors. In the past year, we published issues covering topics in Concurrent Computing Systems, Sensor Networks, Energy - the next frontier, and Reaching New Heights with Intellectual Property. We also published a special issue with articles from our customers, shedding light on a variety of business aspects. We are planning issues on "Journey of the Wheel - Transportation" and "Advances in Driver Safety Applications" for the coming year.

Additional Recognitions received: To share knowledge and learn from other researchers we sent in the research papers for publication in international conferences. This year, five papers were accepted in the national and international conferences and online technology journals. Our commitment to R & D held steady in the past year despite the uncertain world market scenario. We will maintain our drive for solving customers issues as well as developing new cost effective solutions. Our focus areas will be on battery management, driver safety, vision systems, Lab-on Wheels, multicore, high performance computing, hybrid vehicles, and energy. We will continue to take other initiatives such as Nalanda, TechTalk, and University connect to greater heights to ensure breadth as well as depth in the R&D activities.

Technology Absorption — The Company is constantly upgrading its technological excellence through its Infrastructure, Technology and Services (ITS) function. The Company has started building partnerships with leading technology vendors like Microsoft, SAP, HP and Oracle. Through these partnerships the Company has the advantage to create and build technical solutions for its customers and for its own consumption. The Company focuses on using the technology for its own use as well as create showcase for customers.

Foreign Exchange Earnings and Outgo — The Company focuses on exports and undertakes all possible efforts to expand its presence in

the export markets. Total foreign exchange earnings during the year have been Rs. 3,714.09 Million (previous year Rs. 5,949.02 Million) and foreign exchange outgo has been Rs. 705.84 Million (previous year Rs. 2,103.08 Million).

Awards/Recognition

> Mr. S. B. (Ravi) Pandit, Chairman & Group CEO, honored with the Top Management Consortiums (TMC) Award of Excellence 2008- 2009 for his contribution to the field of Information Technology. (March 2010)

> "Vocational Excellence Award" conferred on Mr. Kishor Patil, CEO & Managing Director, by Rotary Club of Pune, Pashan, for his outstanding contribution to the field of Information Technology. (September 2009).

> Among the Best 5 Companies by Industry Focus: Automotive - International Association of Outsourcing Professionals. (April 2009).

> Among the Best 5 Companies by Geography Focus: Japan - International Association of Outsourcing Professionals. (April 2009).

> Among the top 25 companies to demonstrate excellence in Corporate Governance (fourth year in a row) - Institute of Company Secretaries of India - (December 2009).

Acknowledgements

Your Directors take this opportunity to thank all the members and investors of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, International Finance Corporation, HDFC Bank Limited, The Hongkong and Shanghai Banking Corporation Limited, Citibank N.A., Axis Bank Limited, The Royal Bank of Scotland (erstwhile ABN Amro Bank NV). BNP Paribas, Standard Chartered, the Registrars and Share Transfer Agent viz. Link Intirne India Pvt. Ltd. and also thank all the employees of the Company for their valuable contribution in the growth of the Company.

We also thank the Governments of United States of America, United Kingdom, Germany, France, Poland, Japan, Singapore, South Korea and South Africa. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bangalore, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges (where our shares are listed), Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

By Order of the Board of Directors For KPIT Cummins Infosystems Limited

S. B. (Ravi) Pandit

Pune, May 7, 2010 Chairman & Group CEO

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