Directors Report of Zenith Infotech Ltd.

Sep 30, 2013

The Directors have pleasure in presenting their 17lh Annual Report and the audited Accounts for the financial year ended 30th September, 2013.

FINANCIAL HIGHLIGHTS

(Rs.in lakhs)

2012-13 2011-12

Profit/ (Loss) before Depreciation & Taxation & Exceptional Items (7044.77) (4681.38)

Less : Depreciation 1271.76 1269.24

Profit / (Loss) before Taxation & Exceptional Items (8316.53) (5950.62)

Less : Exceptional Items (FCCB Interest) 1896.27 NIL

(10,212.80) (5950.62)

Less: Provision for Taxation NIL NIL

Profit/ (Loss) after taxation available for appropriation (10212.80) (5950.62)

Profit/(Loss) brought forward from the previous year NIL NIL

Amount available for appropriations : (10212.80) (5950.62) Appropriations

Proposed Dividend NIL NIL

Tax on Proposed Dividend NIL NIL

Transfer to General Reserves 336.04 5950.62

Balance Profit / (Loss) carried to the Balance Sheet (9876.76) NIL

COMPANY''S ACTIVITIES

The Company suffered a sharp drop in its business during the financial year 2012 - 2013, on account of a weak US economy as well as the reputational and financial damage the Company has suffered on account of its ongoing litigation. The Company''s turnover was at Rs. 8597.43 Lakhs as against Rs. 10661.51 Lakhs in the previous year. Your Company''s operations, during the year under report, yielded a loss of Rs. 10212.80 Lakhs.

DIVIDEND

Your Directors do not recommend payment of any Dividend in view of the loss made during the financial year ended 30th September, 2013.

REVIEW OF OPERATIONS

a) During the year, the Earnings before Interest, Depreciation and Taxes (EBIDTA) of the Company was negative at Rs. 8791.88 Lakhs as against Rs. 4504.08 Lakhs during the previous year.

b) Exports of the company''s electronic equipment and software were Rs. 8547.15 Lakhs as against Rs. 10588.05 Lakhs during the previous year.

PROSPECTS AND OUTLOOK

Your Directors are fully seized of the fact that the need of the hour is to enhance the Revenue and Profit to higher levels and to achieve this end, efforts have been initiated by adding on value of products, customers and markets.

Vigorous marketing efforts and ceaseless cost reduction activities continue with more thrust and vigor to accomplish these goals.

The efforts are being intensified to sustain leadership position by constantly upgrading the products to match advancing technology trends, maintaining the superiority in quality, and continuing the unblemished timely service support;

Your Directors are hopeful that all the above, coupled with continuous monitoring of inventory, receivables and overheads, would result in healthier results during the current and coming years.

SHIFTING OF THE REGISTERED OFFICE

The Registered Office of the Company was shifted, pursuant to the resolution passed by the Board of Directors on 10th January, 2014, from B-52, ''Electronic Sadan - 1'', MIDC, TTC Area, Mahape, Navi Mumbai 400 710 to Gala No.9, Ground Floor, Building No. 2, Sector 2, Millennium Business Park, MIDC, Mahape, Navi Mumbai 400 710 with effect from 10th January, 2014.

SUBSIDIARY COMPANIES

The Board of Directors had passed a resolution in its meeting held on 14th February, 2014, pursuant to ''General Circulars No. 2 & 3/2011 dated 08.02.2011 and 21.02.2011, giving consent, inter alia, for not attaching the audited Accounts of its subsidiary companies The audited Statements of Accounts of the Company''s Subsidiary Companies in Singapore, Malaysia, USA and the UAE in respect of the financial year ended 31s1 March, 2013 have therefore not been attached, pursuant to Section 212(8) of the Indian Companies Act, 1956. The list of subsidiaries included in the Consolidated Financial Statements and the Company''s holding therein is appended hereto as Annexure ''C and forms part of this Report.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposits under Sections 58A and 58AA of the Companies Act, 1956.

COMPULSORY DEMATERIALISATION OF COMPANY''S SHARES

The Company''s Securities were compulsorily dematerialized with effect from 28th February, 2001 and continue to be traded in the electronic form as per the relevant SEBI guidelines.

LISTING OF SHARES ON THE STOCK EXCHANGES

The Company''s Securities continue to be listed on the Bombay Stock Exchange Limited (BSE), Mumbai and the National Stock Exchange of India Limited (NSE), Mumbai. The Company has paid the requisite Annual Listing Fees for the year 2013-14, to the above Exchanges.

DIRECTORS

Mr. Vipin Shah resigned as a Director on 11lh September, 2013. The Board has placed on record its appreciation of the valuable contribution and advice rendered by Mr. Vipin Shah during his tenure.

Mr. Raj Kumar Saraf retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its process in the Zenith Business Excellence Model known as ZBEM and the Company has gone through external assessment process with good results. A number of initiatives were launched in order to strengthen business processes.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

(1) that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

(2) thatthe Directors 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 at the end of the financial year ended 30"1 September, 2013 and of the profit of the Company for that year;

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

(4) that the Directors have prepared the annual accounts on a going concern basis.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company has issued Foreign Currency Convertible Bonds (FCCBs) of the value of US$ 83 million. FCCBs of the value of US$ 6.080 Million were converted into 8,93,879 Equity Shares of Rs. 10/- each, till date and these shares were duly listed on BSE and NSE in due time. FCCBs of the value of US $ 76.92 million out of US$ 83 million are outstanding as on 30th September, 2013. The Company''s issued, subscribed and paid-up capital is Rs. 12,68,13,7907- divided into 1,26,81,379 Equity Shares of Rs. 10/- each, fully paid-up as on 30.09.2013. The matter is currently under litigation in the Bombay High Court.

EX-PARTE OEDER PASSED BY SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) AND ORDER PASSED BY THE SECURITIES APPELLATE TRIBUNAL (SAT)

SEBI has on 25lh March, 2013 passed an ex-parte Order, inter alia, directing the Board of Directors to furnish Bank Guarantee(s) for US $ 33.93 Million in respect of certain alleged non-disclosures and a sharp fall in the Company''s Share Prices in the market. This Order was successfully challenged by the Company before the Securities Appellate Tribunal; by its Order dated 23rd July, 2013, SAT has directed that all the matters be heard afresh by SEBI. SEBI has preferred an appeal against the SAT Order in the Hon''ble Supreme Court of India.

REFERENCE MADE TO THE BOARD FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION (BIFR)

The Company has made, on 22nd July, 2013, a reference to the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies Act, 1985, on the basis the Company''s Accounts for the 9 months'' period ended 30th June, 2013 and registration of the said reference was declined both by the Registrar on 12lh August, 2013; the appeal filed before the Secretary, BIFR was declined on 13lh September, 2013. The Company has filed an appeal before the Chairman, BIFR; the appeal has been heard and the Order is awaited.

ORDER PASSED BY THE HON''BLE HIGH COURT OF BOMBAY

The Hon''ble High Court of Bombay passed an Order on 13th December, 2013 directing the Company to be wound up and appointing the Official Liquidator as the Liquidator of the Company, but has stayed this direction till 16th April, 2014; the said Order has directed the Administrator, inter alia, to sell the businesses of the Company in the first instance and later the assets of the Company by Public Auction to repay the monies due to the holders of the Foreign Currency Convertible Bonds. The Company has preferred an appeal in the Hon''ble Bombay High Court against the said Order and the matter is pending.

CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governance as applicable to the Company, as per the amended Listing Agreements with the Stock Exchanges. The Report of Corporate Governance with the Auditors'' Report thereon is annexed hereto in accordance with Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

M/s. C.L.Khanna & Company, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, retires at ensuing Annual General Meeting and are eligible for re- appointment.

EMPLOYEES & THE PARTICULARS UNDER SECTION 217(2A)

Relations between the management and its employees have been cordial. Your Directors place on record their appreciation of the efficient and loyal services rendered by the employees of the Company at all levels.

The Statement in respect of employees drawing a salary of Rs. 5 lakhs per month or more for part of the year or Rs. 60 Lakhs or more per annum as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is enclosed as Annexure ''A'' and forms part of this Report..

ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, with respect to conservation of energy, technology

absorption and foreign exchange earnings and outgo is appended hereto as Annexure ''B'' and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the support received from the Company''s Bankers and Shareholders and look forward to their continued support and goodwill.

By Order of the Board

MUMBAI RAJKUMAR SARAF

14th FEBRUARY 2014 CHAIRMAN

---

Sep 30, 2012

To the Members,

The Directors have pleasure in presenting their 16th Annual Report and the audited Accounts for the financial year ended 30th September, 2012.

FINANCIAL HIGHLIGHTS

(Rs.in lakhs)

2011-2012 2010-11 (Financial Year of (Financial Year of 12 Months) 18 Months)

Profit/ (Loss) before Depreciation & Taxation (4681.38) 5728.34

Less : Depreciation 1269.24 4041.08

Profit / (Loss) before Taxation & Exceptional Items (5950.62) 1687.26

Less : Exceptional Items NIL (3032.81)

Profit / (Loss) before Tax (5950.62) (1345.55)

Less : Provision for Taxation NIL 2975.50

Profit/ (Loss) after taxation available for appropriation (5950.62) (4321.05)

Profit/(Loss) brought forward from the previous year NIL 34.36

Amount available for appropriations (5950.62) (4286.69)

Appropriations

Proposed Dividend NIL NIL

Tax on Proposed Dividend NIL NIL

Transfer to General Reserves (5950.62) (4286.69)

Balance Profit / (Loss) carried to the Balance Sheet NIL NIL

COMPANY''S ACTIVITIES

The Company suffered a sharp drop in its business during fiscal 2012, on account of a weak US economy as well as the reputational and financial damage the Company has suffered on account of its ongoing litigation. The Company''s turnover was at Rs. 10661.51 Lakhs as against Rs. 49446.84 Lakhs in the previous year (of 18 months). Your Company''s operations, during the year under report, yielded a loss of Rs. 5950.62 Lakhs.

DIVIDEND

Your Directors do not recommend payment of any Dividend in view of the loss made during the financial year ended 30th September, 2012.

REVIEW OF OPERATIONS

a) During the year, the Earnings before Interest, Depreciation and Taxes (EBIDTA) of the Company was negative at Rs. 4504.08 Lakhs as against Rs. 11052.66 Lakhs during the previous year.

Exports of the company''s TigerCloud and BDR products were Rs. 10588.05 Lakhs as against Rs. 48674.34 Lakhs during the previous year (comprising 18 months).

PROSPECTS AND OUTLOOK

- Your Directors are fully seized of the fact that the need of the hour is to enhance the Revenue and Profit to higher levels and to achieve this end, efforts have been initiated by adding on value of products, customers and markets.

- Vigorous marketing efforts and ceaseless cost reduction activities continue with more thrust and vigor to accomplish these goals.

- The efforts are being intensified to sustain leadership position by constantly upgrading the products to match advancing technology trends, maintaining the superiority in quality, and continuing the unblemished timely service support;

- Your Directors are hopeful that all the above, coupled with continuous monitoring of inventory, receivables and overheads, would result in healthier results during the current and coming years.

SUBSIDIARY COMPANIES

The Board of Directors had passed a resolution in its meeting held on 14th February, 2013, pursuant to ''General Circulars No. 2 & 3/2011 dated 08.02.2011 and 21.02.2011, giving consent, inter alia, for not attaching the audited Accounts of its subsidiary companies The audited Statements of Accounts of the Company''s Subsidiary Companies in Singapore, Malaysia and the UAE in respect of the financial year ended 31st March, 2012 have therefore not been attached, pursuant to Section 212(8) of the Indian Companies Act, 1956. The list of subsidiaries included in the Consolidated Financial Statements and the Company''s holding therein is appended hereto as Annexure ''C'' and forms part of this Report.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposits under Sections 58A and 58AA of the Companies Act, 1956.

COMPULSORY DEMATERIALISATION OF COMPANY''S SHARES

The Company''s Securities were compulsorily dematerialized with effect from 28th February, 2001 and continue to be traded in the electronic form as per the relevant SEBI guidelines.

LISTING OF SHARES ON THE STOCK EXCHANGES

The Company''s Securities continue to be listed on the Bombay Stock Exchange Limited (BSE), Mumbai and the National Stock Exchange of India Limited (NSE), Mumbai.

The Company has paid the requisite Annual Listing Fees for the year 2012-13, to the above Exchanges.

DIRECTORS

Mr. Vijay Mukhi retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its process in the Zenith Business Excellence Model known as ZBEM and the Company has gone through external assessment process with good results. A number of initiatives were launched in order to strengthen business processes.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm:

(1) that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

(2) that the Directors 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 at the end of the financial year ended 30th September, 2012 and of the loss of the Company for that year;

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

(4) that the Directors have prepared the annual accounts on a going concern basis.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company has issued Foreign Currency Convertible Bonds (FCCBs) of the value of US$ 83 million. FCCBs of the value of US$ 6.080 Million were converted into 8,93,879 Equity Shares of Rs. 10/- each, till date and these shares were duly listed on BSE and NSE in due time. FCCBs of the value of US $ 76.92 million out of US$ 83 million are outstanding as on 30th September, 2012. The Company''s issued, subscribed and paid-up capital is Rs. 12,68,13,790/- divided into 1,26,81,379 Equity Shares of Rs. 101- each, fully paid-up, as on 30.09.2012. The matter is currently under litigation in the Bombay High Court and hence sub-judice.

CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governance as applicable to the Company, as per the amended Listing Agreements with the Stock Exchanges. The Report of Corporate Governance with the Auditors'' Report thereon is annexed hereto in accordance with Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

M/s. C.L.Khanna & Company, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, retire at ensuing Annual General Meeting and are eligible for re- appointment.

EMPLOYEES & THE PARTICULARS UNDER SECTION 217(2 A)

Relations between the management and its employees have been cordial. Your Directors place on record their appreciation of the efficient and loyal services rendered by the employees of the Company at all levels.

The Statement in respect employees drawing a salary of Rs. 5 lakhs per month or more for part of the year or Rs. 60 Lakhs or more per annum as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is enclosed as Annexure ''A'' and forms part of this Report..

ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is appended hereto as Annexure ''B'' and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the support received from the Company''s Bankers and Shareholders and look forward to their continued support and goodwill. By Order of the Board

MUMBAI RAJKUMAR SARAF

14th FEBRUARY, 2013 CHAIRMAN

---

Sep 30, 2011

The Directors have pleasure in presenting their 15th Annual Report and the audited Accounts for the financial year (comprising 18 months' period from 1st April, 2010 to 30th September, 2011) ended 30th September, 2011.

FINANCIAL HIGHLIGHTS

(Rs.in lakhs)

2010-2011 2009-2010 (18 months from (12 months from 01.04.2010 to 01.04.2009 to 30.09.2011) 31.03.2010)

Profit/ (Loss) before Depreciation & Taxation 6167.78 9050.32

Less : Depreciation 4041.08 4524.69

Profit / (Loss) before Taxation & Exceptional Items 2163.63 4525.63

Less : Exceptional Items (3032.81) 4250.22

Profit / (Loss) before Tax (869.18) 275.41

Less : Provision for Taxation 2975.50 23.50

Provision for Tax of earlier years 476.37 (60.57)

Profit/ (Loss) after taxation available for appropriation (4321.05) 312.48

Profit/(Loss) brought forward from the previous year 34.36 18.61

Amount available for appropriations : (4286.69) 331.09

Appropriations

Proposed Dividend NIL 253.63

Tax on Proposed Dividend NIL 43.10

Transfer to General Reserves (4286.69) —

Balance Profit / (Loss) carried to the Balance Sheet NIL 34.36

COMPANY'S ACTIVITIES

Fiscal year 2011 continued to be a growth oriented year with the demand for products and services in the Information Technology sector. The Company's turnover was higher at Rs.49,446.84 Lakhs as against Rs. 28,969 Lakhs in the previous year. Your Company's operations, during the year under report, yielded a profit of Rs.2126.70 Lakhs. Your Directors intend to enhance this growth path in the coming years.

DIVIDEND

Your Directors do not recommend any Dividend in respect of the financial year ended 30th September, 2011 to meet future liabilities.

EXTENSION OF THE FINANCIAL YEAR AND EXTENSION OF TIME FOR HOLDING THE 15™ ANNUAL GENERAL MEETING (AGM)

The Company has, with the approval of the Registrar of Companies, Maharashtra, Mumbai (ROC), vide his letter dated 14th November, 2011, extended the financial year by a period of 6 months up to 30th September,

2011 (the financial year under report is therefore from 1st April, 2010 to 30th September, 2011).

The Company has been granted time up to 6th February,

2012 to hold the 15th AGM by the said ROC vide his letter dated 13th December, 2011.

REVIEW OF OPERATIONS

a) As compared to the previous year, the net sales revenue registered a growth of 70.69% to reach Rs.49,446.84 Lakhs.

b) During the year, the Earnings before Interest, Depreciation and Taxes (EBIDTA) of the Company was Rs.10,141 Lakhs as against Rs. 11,570 Lakhs during the previous year.

c) Exports of the company's products and services grew to Rs.48,674 Lakhs as against Rs.27,731 lakhs during the previous year, thus clocking a impressive growth of 75.52% during the year.

PROSPECTS AND OUTLOOK

- Your Directors are fully seized of the fact that the need of the hour is to enhance the Revenue and Profit to higher levels and to achieve this end, efforts have been initiated by adding on value of products, customers and markets.

- Vigorous marketing efforts and ceaseless cost reduction activities continue with more thrust and vigor to accomplish these goals.

- The efforts are being intensified to sustain leadership position by constantly upgrading the products to match advancing technology trends, maintaining the superiority in quality, and continuing the unblemished timely service support;

- Your Directors are hopeful that all the above, coupled with continuous monitoring of inventory, receivables and overheads, would result in healthier results during the current and coming years.

SALE OF MANAGED SERVICES DIVISION (MSD) OF THE COMPANY

The Company, pursuant to the approval granted by the shareholders in the Extraordinary General Meeting held on 29th January 2011, sold its MS division in September 2011 to M/S Continuum, LLC (earlier known as Zenith RMM, LLC - a company formed and funded by Summit Partners LP) for US$54.7mn (includes an amount of $6mn held in a joint escrow account with Continuum, LLC). In addition, the company's wholly owned subsidiary, Zenith InfoTech FZE, holds approximately 14% equity in Continuum, LLC.

The Company has paid advance income tax of Rs.29 crores in December 2011.

SUBSIDIARY COMPANIES

The Board of Directors had passed a resolution in its meeting held on 3rd January, 2012, pursuant to 'General Circulars No. 2 & 3/2011 dated 08.02.2011 and 21.02.2011, giving consent, inter alia, for not attaching the audited Accounts of its subsidiary companies The audited Statements of Accounts of the Company's Subsidiary Companies viz. ZENITH INFOTECH (SINGAPORE) PTE LTD., Singapore, ZENITH INFOTECH SERVICES SDN. BHD, Malaysia and ZENITH INFOTECH FZE in Sharjah Airport International Free Zone (SAIF-Zone), UAE, in respect of the financial year ended 31st March, 2011 have therefore not been attached, pursuant to Section 212(8) of the Indian Companies Act, 1956.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposits under Sections 58A and 58AA of the Companies Act, 1956.

COMPULSORY DEMATERIALISATION OF COMPANY'S SHARES

The Company's Securities were compulsorily dematerialized with effect from 28th February, 2001 and continue to be traded in the electronic form as per the relevant SEBI guidelines.

LISTING OF SHARES ON THE STOCK

EXCHANGES

The Company's Securities continue to be listed on the Bombay Stock Exchange Limited (BSE), Mumbai and the National Stock Exchange of India Limited (NSE), Mumbai. The Company has paid the requisite Annual Listing Fees for the year 2011-12, to the above Exchanges.

DIRECTORS

Mr. Vijay Ram Mukhi retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its process in the Zenith Business Excellence Model known as ZBEM and the Company has gone through external assessment process with good results. A number of initiatives were launched in order to strengthen business processes.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm:

(1) that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

(2) that the Directors 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 at the end of the financial year ended 30th September, 2011 and of the profit of the Company for that year;

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

(4) that the Directors have prepared the annual accounts on a going concern basis.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company had issued two foreign currency convertible bonds (FCCBs) out of which US$26.92mn ($33mn originally issued, $6.08mn converted to equity shares in previous financial years) was due in September 2011 and $50mn is due in August 2012.

US$26.92mn worth of FCCB s became due in September 2011, and the Company has disputed the claim of the bondholders as an amount larger than what is correctly due has been claimed.

CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governance as applicable to the Company, as per the amended Listing Agreements with the Stock Exchanges. The Report of Corporate Governance with the Auditors' Report thereon is annexed hereto in accordance with Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

M/s. C.L.Khanna & Company, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, retire at ensuing Annual General Meeting and are eligible for re-appointment.

EMPLOYEES & THE PARTICULARS UNDER SECTION 217(2A)

Relations between the management and its employees have been cordial. Your Directors place on record their appreciation of the efficient and loyal services rendered by the employees of the Company at all levels.

The Company's Statement of employees drawing a salary of Rs.5 lakhs per month or Rs.60 Lakhs per annum as required under Section 217(2A) of the Companies Act, 1956 read with the Companies

(Particulars of Employees) Rules, 1975 annexed to this Report as 'Annexure - 1'.

ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is appended hereto as Annexure '2' and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the support received from the Company's Bankers and Shareholders and look forward to their continued support and goodwill.

By Order of the Board

MUMBAI RAJKUMAR SARAF

3rd January, 2012 CHAIRMAN

---

Mar 31, 2010

The Directors have pleasure in presenting their 14th Annual Report and the audited Accounts for the financial year ended 31st March, 2010.

FINANCIAL HIGHLIGHTS

(Rs.in lakhs)

2009-2010 2008-2009

Profit/ (Loss) before Depreciation & Taxation 9050.32 8719.78

Less : Depreciation 4524.69 3300.80

Profit / (Loss) before Taxation & Exceptional Items 4525.63 5418.98

Less : Exceptional Items 4250.22 -

Profit before Tax 275.41 5418.98

Less : Provision for Taxation 23.50 583.95

Profit/ (Loss) after taxation available for appropriation 251.91 4835.03

Profit/(Loss) brought forward from the previous year 18.61 4.05

Amount available for appropriations : 270.52 4839.08

Appropriations

Provision for Tax of earlier years (60.57) 9.17

Proposed Dividend 253.63 244.71

Tax on Proposed Dividend 43.10 41.59

Transfer to General Reserves - 4525.00

Balance Profit / (Loss) carried to the Balance Sheet 34.36 18.61

COMPANYS ACTIVITIES

Fiscal year 2010 continued to be a growth oriented year with the demand for products and services in the Information Technology sector. The Companys turnover was higher at Rs. 28,969 Lakhs as against Rs. 20,033 Lakhs in the previous year. Your Companys operations, during the year under report, yielded a profit of Rs. 275 Lakhs. Your Directors intend to enhance this growth path in the coming years.

DIVIDEND

Your Directors recommend payment of Dividend of Rs. 2.00 per Equity Share (i.e. 20% ) in respect of the financial year ended 31s1 March, 2010.

REVIEW OF OPERATIONS

a) As compared to the previous year, the net sales revenue registered a growth of 45% to reach Rs. 28,969 Lakhs.

b) During the year, the Earnings Before Interest, Depreciation and Taxes (EBIDTA) of the Company has increased to Rs. 11,570 Lakhs as against Rs. 9,584 Lakhs during the previous year thereby registering a robust growth of 21%.

d) Exports of the companys SAAZ software, Virtual NOC, BDR and ARCA product grew to Rs. 27,731 Lakhs as against Rs. 18,372 lakhs during the previous year, thus clocking an impressive growth of 51% during the year.

e) The companys new product lines code-named Smart Style Office and Private Cloud Computing named PROUD was launched in the North American and European markets in March 2010. Products are based on cutting edge server and storage virtualization technology and are targeted at the high growth HaaS (hardware as a service) market.

PROSPECTS AND OUTLOOK

• Your Directors are fully seized of the fact that the need of the hour is to enhance the Revenue and Profit to higher levels and to achieve this end, efforts have been initiated by adding on value of products, customers and markets.

• Vigorous marketing efforts and ceaseless cost reduction activities continue with more thrust and vigor to accomplish these goals.

• The efforts are being intensified to sustain leadership position by constantly upgrading the products to match advancing technology trends, maintaining the superiority in quality, and continuing the unblemished timely service support;

• Your Directors are hopeful that all the above, coupled with continuous monitoring of inventory, receivables and overheads, would result in healthier results during the current and coming years.

SUBSIDIARY COMPANIES

The audited Statements of Accounts of the Companys wholly owned Subsidiary viz. ZENITH INFOTECH (SINGAPORE) PTE LTD., in respect of the financial year ended 31st March, 2010 along with the Reports of the Auditors and the Directors thereon, pursuant to Section 212 of the Indian Companies Act, 1956 are annexed hereto.

The Audited Statement of Accounts of the Companys subsidiary namely Zenith Infotech Services SDN. BHD in respect of the financial year ended 31s March, 2010 along with the Reports of the Auditors and the Directors thereon, pursuant to Section 212 of the Indian Companies Act, 1956 are annexed hereto.

During the year, the Company has incorporated a wholly owned subsidiary named as Zenith Infotech FZE in Sharjah Airport International Free Zone (SAIF-Zone), UAE. The Unaudited Statement of Accounts of the Companys subsidiary namely Zenith Infotech FZE in respect of the financial year ended 31st March, 2010 pursuant to Section 212 of the Indian Companies Act, 1956 are annexed hereto.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposits under Sections 58A and 58AA of the Companies Act, 1956.

COMPULSORY DEMATERIALISATION OF COMPANYS SHARES

The Companys Securities were compulsorily dematerialized with effect from 28th February, 2001 and continue to be traded in the electronic form as per the relevant SEBI guidelines.

LISTING OF SHARES ON THE STOCK EXCHANGES

The Companys Securities continue to be listed on the Bombay Stock Exchange Limited (BSE), Mumbai and the National Stock Exchange of India Limited (NSE), Mumbai. The Company has paid the requisite Annual Listing Fees for the year 2010-11, to the above Exchanges.

DIRECTORS

Mr. Rajkumar Saraf retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. *

BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its process in the Zenith Business Excellence Model known as ZBEM and the Company has gone through external assessment process with good results. A number of initiatives were launched in order to strengthen business processes.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm:

(1) that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed;

(2) that the Directors 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 at the end of the financial year ended 31st March, 2010 and of the profit of the Company for that year;

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

(4) that the Directors have prepared the annual accounts on a going concern basis.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company has issued Foreign Currency Convertible Bonds (FCCBs) of the value of US$ 83 million. During the year FCCBs of the value of US$ 3 Million were converted in 2 tranches into 4,45,935 Equity Shares of Rs. 10/- each at a premium of Rs. 300.37 per share. These shares were listed on BSE and NSE in July, 2009 and October 2009. The Companys issued, subscribed and paid-up capital is Rs. 12,68,13,790/- divided into 1,26,81,379 Equity Shares of Rs. 10/- each, fully paid-up as on 31.03.2010.

CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governance as applicable to the Company, as per the amended Listing Agreements with the Stock Exchanges. The Report of Corporate Governance with the Auditors Report thereon is annexed hereto in accordance with Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

M/s. C.L.Khanna & Company, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, retire at ensuing Annual General Meeting and are eligible for re-appointment.

EMPLOYEES & THE PARTICULARS UNDER SECTION 217(2A)

Relations between the management and its employees have been cordial. Your Directors place on record their appreciation of the efficient and loyal services rendered by the employees of the Company at all levels.

The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given as below :

For the full year - Nil

Part of the vear :

Sr. No. Name Designation Remu- Qualification Total neration Experience (Amt. in Rs.) (No. of years)

1 ShankarIyer Vice President 9,78,497 B.Sc, 20 -Proud BU (Physics Quality Education Svstems

Name Age Date of Previous in Years Commencement Employment of Employment (Designation)

Shankar Iyer 45 21,12.2009 Redhat IT Services

The Ministry of Corporate Affairs has amended the Companies (Particulars of Employees) Rules, 1975 to the effect that the particulars of the employees of the Companies engaged in Information Technology Sector, posted and working outside India, not being Directors or their relatives, need not be included in the statement but, such particulars shall be furnished to the Registrar of Companies. Accordingly, the statement included in this report does not contain the particulars of employees who are posted and working outside India.

ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is appended hereto as Annexure A and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the support received from the Companys Bankers and Shareholders and look forward to their continued support and goodwill.

By Order of the Board

MUMBAI RAJKUMAR SARAF

29th May, 2010 CHAIRMAN