Compiled by : Asian CERC Information Technology Ltd.

eClerx Services Private Limited

7rth Annual Report

2006-2007
 Compiled by : Asian CERC Information Technology Ltd.

DIRECTORS' REPORT

To
The Members,
Eclerx Services Private Limited

Dear Members,

Your Directors present their Seventh Annual Report for the year ended 31st March 2007,
together with the Audited Statement of Accounts for the year ended as on that date.

FINANCIAL RESULTS:

The operating results of the company for the year are as follows:

For the period For the period

ended on 31st ended on 31st
March 2007 March 20C6.
Revenue 862,339,882 476,863,028
Profit / (Loss) before tax 399,425,927 246,547,848
Less: Provision for Tax
Provision for Fringe Benefit Tax 2,700,000 1,925,000
Profit After tax 396,725,927 244,622,848
Add: Balance b/f 79,782,086 44,881,900
Less: Interim Dividend 202,500,000 75,937,500
Proposed Dividend 86,062,500
Tax on Interim Dividend 28,400,625 10,650,234
Provision for Tax on Proposed
. Dividend 12,070,266
Short / Excess Provision for Tax 41,471 2,162
Transfer to General Reserves 40,000,000 25,000,000
Balance Carried to Balance Sheet 205,565,917 79,782,086

DIVIDENDS:

Your Directors recommend the interim dividend already paid as the final dividend for
the year under review.
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PARTICULARS OF EMPLOYEES:

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

Sr Name Designation Remuneration Qualification Date of Experience Age Last

employment Employment
1 P.D.Mundhra Executive Rs.88,00,000/- MBA I5' April 10 34 NIL
Directot 2006

DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm:

a) That in the preparation of the annual accounts, the applicable accounting

standards have been made followed and that no material departures have been
made for the same;

b) That the selected accounting policies were applied 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, 2007 and of the
Loss of the Company for the year ended on that date;

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

d) That the annual accounts have been prepared on a going concern basis.

PARTICULARS OF DEPOSITS:

The Company has not accepted any deposits from the public as contemplated uiider
section 58 A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975.

SECTION 217(1) (e) OF THE COMPANIES ACT 1956:

Additional information on Conservation of Energy, Technology Absorption, Foreign

Exchange Earnings and outgo as required to be disclosed in terms of Section 217(1) (e) of
 Compiled by : Asian CERC Information Technology Ltd.

the Companies Act 1956 read with Companies (Disclosure of particulars in the report of
Board of Directors) Rule 1986 is not given since the Company has not dealt in any of the
areas specified therein.

AUDITORS:

M/s C.M. Gabawala & Co., Chartered Accountants had expressed their
unwillingness to continue as Statutory Auditors and their term expired at the
Annual General Meeting, Accordingly Board recommends the appointment of
M/s Walker Chandiok & Co, Chartered Accountants as Statutory Auditors for
the financial year 2007-08.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to thank all the employees, shareholders, bankers
of the Company, Financial Institutions, other Government Departments and Agencies,
consultants & advisors auditors and others for their continuous support, co-operation
and guidance.

On Behalf of the Board of Directors

Sclerx Services Private Limited

Date: 25th July, 2007

Place: Mumbai
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C. M. GABHAWALA & CO. <"•*•>

CHARTERED ACCOUNTANTS
42, Nanik Niwas, 30, Dr. D. D. Sathe Marg, Girgaum, M U M B A I -400 004.
Phone J 238?. 3923 / 2382 4641 / 2384 1752 Fax j 2385 0931
1 i cm8co@hathway.com

AUDITORS' REPORT

To,
The Members of eQerx Services Private limited

1. We have audited the attached Balance Sheet of eClerx Services. Private limited as at
31S( IVfarch, 2007 and the annexed Profit & Loss Account for the year ended on that date
annexed thereto. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements
based on our audit.

2. We conducted the audit in accordance with Auditing Standards generally accepted in

India. Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that the audit provides a
reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the Companies Act,
19^6, we enclose in the Annexure a statement on the matters specified in paragraphs 4
& 5 of the said Order.

4 Further to our comments in the Annexure referred to above, we report that:

(i) - We have obtained all the information and explanation which to the besi of our
knowledge and belief were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by
the Company so far as appears from our examination of those books.

(iii) The Balance Sheet and Profit and Loss account dealt with by this report are in
agreement with the books cf accounts.

(iv) In our opinion, the Balance sheet and Profit and Loss account dealt with by this
report comply with the accounting standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st
March, 2007 and taken on record by the Board of Directors, we report that none
of the directors are disqualified as on 31s' March 2006 from being appointed as
a director in terms of clause (g) of sub-section (1) of section 274 of the_
Companies Act 1956;
- . <;<?\
^fjdOtiBW'Sj
>i>
 Compiled by : Asian CERC Information Technology Ltd.

C. M. GABHAWALA & CO.

CHARTERED ACCOUNTANTS
42, Nanik Niwas, 30, Dr. D. D. Sathe Marg, Girgaum, M U M B A 1-400 004,
Phone : 2382 3923 / 2382 4641 / 2384 1752 Fax : 2385 0831
e-inail i cmgco@h3thway.com

(vi) In our opinion and to the best of our information and according to the
explanation given to us, the said accounts gives the information required by the
Companies Act, 1956 in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India.

(a) In the case of the Balance Sheet, of state of affairs of the Company as at
31ST MARCH, 2007; and :

(b) In the case of the Profit and Loss Account, of the Profit for the year
ended on that date;

(c) In the Case of Cash Flow Statement, of the Cash Flows For the year
ended on that date.

For C. M. GABHAWALA & CO.

CHARTERED ACCQUNTANIS

(Biren C. Gabhawala)
Partner
M. No. 40496

Place : Mumbai
Ih
Dated : 25" July, 2007
 Compiled by : Asian CERC Information Technology Ltd.

C. M. GABHAWALA & CO,

CHARTERED ACCOUNTANTS
42, Nanik Niwas, 30, Dr. D. D. Sathe Marg, Girgaum, M U M B A 1-400 004
Phone ! 2382 3923 / 2382 464'. / 2384 1752 Fax : 2385 0931
e-maii I cm§co@hathway.com

ANNEXURE TO AUDITORS' REPORT

Re: eClerx Services Private Limited

Referred to in paragraph 3 of our report of even date

(i) (a) The Company has maintained proper records showing full particulars
including quantitative details and situations of the fixed assets.

(b) The Company conducts physical verification of fixed assets in phase wise
manner. Out of the total fixed assets, only part is completed. No material
discrepancies were noticed on such verification.

(c) During the year, the company has not disposed off any major part of Fixed
Assets.

(ii) (a) The Company does not have any inventories of goods, hence clause
4(ii)(a), (b), (c) of Companies (Auditor's Report) order, 2003 is not
applicable.

(iii) (a) The Company has taken loan from one party covered in the register
maintained under section 301 of the Companies Act, 1956 and the amount
involved in the transaction during the year was Rs. 39,200,000.

(iv) In our opinion and according to information and explanations given to us,
there is adequate internal control system commensurate with the size of the
cc nip any and the nature of its business with regard to, purchases of fixed
assets and for rendering the services. No major weaknesses have been
noticed in the internal control system, during the course of audit.

(v) (a) According to the information and explanations given to us, we are of the
opinion that the particulars of contracts or arrangements referred to in
section 301 of the act have been entered into the register required to be
maintained under that section.

(b) In our opinion and according to the information and explanations given to
us, the transactions made in pursuance of contracts or arrangements entered
in the register maintained under section 301 of the Companies Act, 1956
and exceeding the value of rupees five lakhs in respect of party during the
year have been made at prices which are prima facie reasonable having
regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any public deposits during the year under
review. Accordingly, provisions of clause 4(vi) of Companies (Auditor's
Report) order, 2003 is not applicable.
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c CHARTERED ACCOUNTANTS
(Regd.)

42, Nanik Niwas, 30, Dr. D. D. Sathe Marg, Girgaum, M U M B A 1-400 004.
Phone t 2382 3923 / 2382 4641 / 2384 1752 Fax : 2385 0931
e-mail i cmico@hathway.com
. -2- :
(yii) The Company does not have any formal internal audit system, however it
has adequate internal controls to commensurate with its size and nature of
business, which ensures reasonable checks on its financial and other
matters.

(viii) The Central Government has not prescribed any cost records to be
maintained by the company, hence clause 4(viii) of Companies (auditor's
Report) order, 2003 is not applicable.

(ix) (a) The company is regular in depositing with appropriate authorities

undisputed statutory dues including income tax, sales tax and other material
statutory dues applicable to it. According to the information and
explanations given to us, no -undisputed amounts payable in respect of
income tax, sales tax were in arrears, as at 31SI March, 2007 for a period of
:
more than six months from the date they became payable.

(b) According to the information and explanation given to us, there are no dues
of income tax, sales tax which have not been deposited on account of any
dispute.

(x) The company does not have any accumulated losses as at 31st March, 2007.
The company has not incurred any cash loss during the financial year
covered by our audit and also in the immediately preceding financial year.

(xi) The company has neither borrowed funds from financial institutions, banks
nor issued any debentures. Hence, clause 4(xi) of Companies (Auditor's
Report) order, 2003 is not applicable.

The company has not granted any loans and advances on the basis of
securities by way of pledge of shares, debentures and any other securities.
Hence, clausex4(xii) of Companies (Auditor's Report) order, 2003 is not
applicable.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit
fund/society. Hence, clause 4(xiii) of companies (Auditor's Report) order,
2003 is not applicable.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities,
debentures and other investments. Hence, clause 4(xiv) of Companies
(Auditor's Report) order, 2003 is not applicable.

(xv) The company has not given any guarantee for loans taken by others from
banks or financial institutions. Hence, clause v(xiv) of Companies
(Auditor's Report) order, 2003 is not applicable.

The company has not taken any term loans during the year. Hence, clause
4(xvi) of Companies (Auditor's Report) order, 2003 is not applicable.
 Compiled by : Asian CERC Information Technology Ltd.

C. M. GABHAWALA & CO. <"•*.)

CHARTERED ACCOUNTANTS
42, Nanik Niwas, 30, Dr. D. D. Sathe Marg, Girgaum, M U M 8 A 1-400 004.
Phone { 2382 3923 / 2382 4641 / 2384 1752 Fax : 2385 0931
e-mail I cmgco@hathway.com

-j-

(xvii) According to the information and explanations given to us and on an overall

examinations of the balance sheet of the company, we report that no funds
raised on short term basis have been used for long term investment company.

(xviii) According to information and explanations given to us, the company has not
made any preferential allotment of shares to parties and companies covered
in the register maintained under section 301 of the Act. Hence, clause
4(xviii) of Companies (Auditor's Report) order, 2003 is not applicable.

(xix) The company has not issued any debentures. Hence clause 4(xix) of
Companies (Auditor's Report) order, 2003 is not applicable.

(xx) The company has not made any public issues during the year. Hence clause
4(xx) of Companies (Auditor's Report) order, 2003 is not applicable.

(xxi) Based on the audit procedures performed and according to the information
and explanations given to us, no fraud on or by the company has been
noticed or reported during the year.

For C. M. GABHAWALA & CO.

CHARTERED ACCOUNTANTS

(Biren C. Gabhawala)
Partner
M. No. 40496

PLACE : Mumbai
DATE : 25lh July, 2007
 Compiled by : Asian CERC Information Technology Ltd.

eClerx Services Pyt. Ltd.

BALANCE SHEET AS AT 31 ST MARCH. 2007

SCHEDULE Current Year PREVIOUS YEAR

PARTICULARS
RS RS
SOURCE OF FUNDS
Share Holder's Funds :
Share Capital A 10,125,000 10,125,000
Stock Option Oustanding 186,871 49,691
Reserves & Surplus B 283,190,917 117,407,086
293,502,788 127,581,777

TOTAL FUNDS EMPLOYED 293,502,788 127,581,777

APPLICATION OF FUNDS

Fixed Assets
Gross Block C 142,911,743 115,202,512
Less : Depreciation 66,377,329 34,256,099
Net Block 76,534,414 30,946,413

Closing WIP including Capital Advances 400,000 '

Investments D 21,885 12,624,382

Current Assets. Loans & Advances

Unbilled Revenue 65,782,549 30,712,055
Cash & Bank Balance E 73,510,798 59,037,591
Sundry Debtors F 119,235,271 66,367,516
Loans & Advances G 19,973,410 12,908,249
278,502,028 169,025,412
Less : Current Liabilities & Provisions H
a) Current Liabilities 23,089,151 4,456,665
b) Provisions 38,866,389 130,557,766
61,955,540 135,014,431

Net Current Assets 216,546,488 34,010,981

TOTAL FUNDS APPLIED 293,502,788 127,581,777

Significant: accounifng policies, Notes to Accounts ana i"

Schedules referred to herein form an integral
part of Balance Sheet

As per our report of even date

For c. M. Gabhawaia & Co For eClerx Services Pvt.Ltd.

Chartered^Accountants/^^N fl 1 /

(Biren C Gabhawaia) /"vTT'X ,<""—TFTDTMundhra) (Anjan Malik)

(Partner) /^^'>-'XV\ Director Director
(M. No. 40496) t^f ^z^'^\

Place : Mumbai V^A'^ v "/

Date : 25th July 2007 \J_L^X
 Compiled by : Asian CERC Information Technology Ltd.

eCIerx Services Pvt. Ltd.

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH. 2007
SCHEDULE CURRENT YEAR PREVIOUS YEAR
PARTICULARS
RS RS ,

INCOME
Services 795,415,476 441,268,796
Unbilled Revenue 65,782,549 30,712,055
Other Income J 1,141,857 4,882,176
862,339,882 476,863,028

EXPENSES
Payment to & provision for employees • K 245,467,527 125,059,379
Administrative expenses L 165,886,848 81,357,616
Selling and Distribution expenses M 19,412,457 8,754,737
430,766,832 215,171,731

NET PROFIT BEFORE DEPRECIATION &TAXES 431,573,050 261,691,297

Depreciation C 32,147,123 15,143,449

NET PROFIT AFTER DEPRECIATION BEFORE TAXES 399,425,927 246,547,848

Less : Provision for Taxation

> a) Current Tax
b) Deferred Tax
c) Fringe Benefit Tax 2,700,000 1,925,000
2,700,000 1,925,000

NET PROFIT AFTER TAXES 396,725,927 244,622,848

Surplus brought forward from previous years 79,782,086 44,881,900

Profit available for Appropriation 476,508,013 289,504,748

Less : Appropriation:
Interim Dividend 202,500,000 75,937,500
Tax on Interim Dividend 28,400,625 10,650,234
Proposed Dividend (Final) 86,062,500
Provision for Tax on Proposed Dividend 12,070,265
Short/ Excess Provision for Tax 41,471 2,162
Transfer to General Reserve 40,000,000 25,000,000
270,942,096 209,722,662
Balance carried to Balance Sheet 205,565,917 79,782,086
Earnings per Share - Basic/ Diluted 392 240
(Face value Rs. 10/-)
*v Significant accounting policies. Notes to Accounts and
,' Schedules referred to herein form an integral
'part of Profit & Loss Account

As per our report of even date

ForC. M. Gabhawala & Co For eCIerx) Services Pvt.Lra. /

Chartered-Accountants [ \
^-'-" Jj ^J d&\^My^> AC
f ^^^^^jp^-^*^ ^___ —• (PTDTMundhra) (Anjan Malik)
(Biren C Gabhawala) /^v^TTX Director Dtrector
(Partner) /^"""VA
(M. No. 40496) ,(«,r ^)<2\
i*vT ^-W
Place : Mumbai \^ ^"^ ^ ../
Date : 25th July 2007 ^-^—J-^
 Compiled by : Asian CERC Information Technology Ltd.

eClerx Services Pvt. Ltd.

Cash Flow Statement For the year ended For the year ended
March 31, 2007 March 31, 2006
2007 2006

A. Cash Flow from Operating Activities

Net Profit Before Tax & Exceptional Items 399,425,927 246,547,848

Adjustments for :
Depreciation 32,147,123 15,143,449
Stock Options Oustanding 137,180 49,691
(Profit) / Loss on Sale of Investments 2,527 (8,483)
Dividend Income (200,030) (522,465)
Interest income (71,489) (51,670)
Operating Profit Before Working Capital Changes 431,441,238 261,158,369
Adjustments for:
Trade and Other Receivables (87,938,249) (54,956,636)
Fixed Deposit with Banks (55,449) (353,770)
Loans and Advances (7,065,161) (7,595,261)
Current Liabilities & Provisions 25,073,876 4,737,558
Income Taxes paid (2,741,471) (1,927,162)

Net Cash Generated by Operating Activities 358,714,785 201,063,098

B. Cash Flow from Investing Activities :

Sale of Investments 27,783,593 94,156,566

Purchase of Investments "(15,183,623) (106,772,465)
Sale of Fixed Assets '113,672
Purchase of Fixed Assets (incl Capital work in progress) (28,248,795) (62,267,741)
Interest income 71,489 51,670
Dividend Income 200,030 522,465
Net Cash Generated by / (used in ) Investing Activities (15,263,636) (74,309,505)

C. Cash Flow from Financing Activities :

Dividend Paid (288,562,500) (75,937,500)

Dividend Tax Paid (40,470,891) (10,650,234)

Net Cash used in Financing Activities (329,033,39-:) (86,587,734)

Net (Decrease) / Increase in Cash and cash equivalents 14,417,758 40,165,860

Cash & Cash Equivalents at the beginning of the period 57,883,005 17.717,145
Cash & Cash Equivalents at the end of the period 72,300,763 57,883,005

For C. M. Gabhawala & Co For eClerx Services Pvt.Ltd.

Chajtefed-Accountants

Biren C Gabhawala /lundhra Anjan r.'alik

Partner Director Director
Membership No. 40496

Place : Mumbai
Date : 25th July 2007
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eCSerx Services Pvt. Ltd.

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31 ST MARCH. 2007

CURRENT YEAR PREVIOUS YEAR

PARTICULARS
RS RS
SCHEDULE 'A' : SHARE CAPITAL

Authorised Share Capital

11,00,000 Equity Shares of Rs.10/- each 11,000,000 11,000,000

Issued, Subscribed and Paid - up

10,12,500 Equity Shares of Rs.10/- each fully paid up 10,125,000 10,125,000
\Q<i Vr.e abw« stores, IQ.QQ.OOQ Eqvyfy stores ^ Rs. W.-
each have been issued for consideration other than cash
by way of Bonus shares by capitalising free reserves)

• 10,125,000 ',-0,125,000
"SCHEDULE -B' : RESERVES & SURPLUS

Security Premium
7,775,000
Opening Balance
Less : Transfer to Share Capital as Bonus ; 7,775,000

General Reserve
Opening balance 37,625,000 14,850,000
Less : Transfer to Share Capital as Bonus 2,225,000
37,625,000 12,625,000
Add : Transfer from Profit & Loss Account 40,000,000 25,000,000 37,625,000
77,625,000
37,625,000

Profit & Loss Account 205.565,917 79,782,086

283,190,917 117,407,086
SCHEDULE 'D1 : INVESTMENTS
Non-trade (Quoted)
Mutual Fund
Templeton Floating Rate Income fund - Short Term Plan 21,885 12,624,382
•s, (Dividend Re-investment Plan) (Face value Rs. 10/-)
(Market Value Rs. 16433.68 & 6t PY Rs. 12609788. 56) 21,885 12,624,382

SCHEDULE 'E1 : CASH & BANK BALANCE

Cash in Hand 302,261 117,896
Balance.wjttiSqheduled Banks 71,998,502 57,765,109
Balance with Scheduled Banks - Fixed deposits 1,210,034 1,154,586
(Including Accrued Interest) (The Fixed Deposits have been
Pledged with the Bank against Bank Gurantee except one 73,510,798 59,037,591
which is pledged for Foreign Currency Hedgeing)
 Compiled by : Asian CERC Information Technology Ltd.

eCierx Services Pvt. Ltd.

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31 ST MARCH. 2007

CURRENT YEAR PREVIOUS YEAR

PARTICULARS
RS RS
SCHEDULE 'F* : SUNDRY DEBTORS
(Unsecured considered good by management)
More than Six months 1,115,375
Others 119,235,271 65,252,141
115,235,271 66,367,516
SCHEDULE 'G' : LOANS AND ADVANCES
(Unsecured considered good by management)
Advance recoverable in cash or in kind for value
to be received
Advance Against Salary 495,000 1,608,000
Prepaid Expenses 1,165,165 891,211
Advance Tax Paid (IDS) A.Y.-2005-06 3,307
Advance Tax Paid (TDS) (A. Y. 2006-2007) 11,691
Advance Fringe Benefit Tax (A. Y. 2007-2008) 1,570,275 1,570,275
Self Assessment-Fringe Benefit Tax (A. Y. 2006-2007) 408,874
Advance Fringe Benefit Tax (A. Y. 2007-2008) 2,759,000
IT.Refund Due for A.Y. 2004-05 1,273
ABC Consultants Private Limited 100,000
Carpet Raya Collection SND 216,467
MaFoi Management Consultants Ltd. 54,000
VSNL 315,855
Service Tax Account 2006-07 2,953,918
TDS on FD BOI Interest 31,038
Deposits 8,220,670 8,136,170
Foreign Currency Receivable 2238313.27

SCHEDULE 'G1* : ADVANCE PAID TO SUPPLIERS

Thomas Cook (I) Ltd. .131,157

19,973,410 12,908,249
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eClerx Services Pvt. Ltd

SCHEDULES ANNEXED TO AMD FORMIMG PART OF THE BALANCE SHEET AS AT 31ST MARCH 2007

CURRENT YEAR PREVIOUS YEAR

PARTICULARS
RS RS

'SCHEDULE 'H': CURRENT LIABILITIES & PROVISIONS

a) CURRENT LIABILITIES
Advance Reed for Exports
Markit Group 2,349,187
Lehman Brother 304.920
Advance reed from Suppliers 3.741
2,657,848

Sundry Creditors for goods and services

Aaron Travels 76,903 5,536
Acess Dataline Pvt Ltd. 57,156
Axicom Optimals Pvt Ltd. 237,736
N Amro Credit Card 20,872
vl. Gabhawala & Co. 159,945 127,133
( Dolly Mittal 42,705
Dunil Electric Saver & Maintenance Co. Pvt LTd. 40,291
eClerx LLC USA 4,778,400
eClerx U.K. Ltd. 4,688,750
Hans Copy center 9,170
Hewitt Asscoaites (I) Pvt Ltd. 190,698
Myndcentere Consulting Pvt Ltd. 42,363
Travie Master 42,334 36,554
Value Consulting 36,554
Wipro Ltd. 210,030
Worldcom Communication India Pvt.Ltd. 732,776
Monitron Security Pvt.Ltd. 169,813 44,127
Navbharat Estate Development P.Ltd. 645,586
Skypak SeiViCt! SpedaiiaS 997
Shivani Agarwal 42,705
Softex Consultancy 19,069
Sodexho Pass Services Pvt. Ltd. 1,265
Sterling Frieghts P.L. 59,795
Tops Security Ltd. 49,375
Credit card Abn Amro Bank 24,332
Strattnn 205.800

10,976,156 1,822,614

Outstanding Expenses 9,455,147 2,634,051

Total Current Liabilities 23,089,151 4.456,665

b) Provisions
Provision for Gratuity 4,241,389 3,000,000
Provision for FBT 06-07 1,925,000 1,925,000
Provision for FBT 07-08 2,700,000
Provision for Incentive bonus . 30,000,000 27,500,000
_ -Proposed Dividend 86,062,500
Provision Dividend Distribution Tax 12,070,266
38,866,389 130,557,766
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eClerx Services Pvt. Ltd.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH 2007

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT

CURRENT YEAR PREVIOUS YEAR

PARTICULARS
RS RS
SCHEDULE 'J1 : OTHER INCOME

Interest on Fixed Deposit (TDS Rs. 31,038 & Rs.1 1,691 P.Y.) 71,489 51,670
• Profit on Sale of Investments - 8,483
Dividend ( T. D. S. - NIL) 200,030 522,465
Provision no longer reqd w/back 865,906 14,321
Income tax refund 4,168 '

_
Interest on Income tax refund 264
Exchange Difference 4,285,237

1,141,857 4,882,176
SCHEDULE 'K1 : PAYMENT TO AND PROVISION FOR EMPLOYEE
Salary & Wages 229,309,685 120,825,741
Gratuity 1,241,389 1,650,000
Directors Remuneration 8,800,000 360,000
Staff Welfare Exps. 4,058,336 1,665,133
Training Exps. 1,920,937 508,813
Employee Compensation Expense 137,180 49,691
245,467,527 125,059,379
SCHEDULE V : ADMINISTRATIVE EXPENSES
Audit Fees 168,360 134,688
Bank Charges - 874.497 287,256
Bad Debt 131,335 -
Computer Expenses 648.613 307,276
Contract for Services 87,160,549 42,095,694
Conveyance Expenses 2,815,387 4,508,037
Donation 2,155,750 1 ,005,000
Electricity Expenses 12,017,456 7,017,317
Exchange Diff 8,053,450 -
House Keeping Expenses 2,837;181 1,018,406
Insurance Expenses 561,678 625,265
Internet Charges 5,337,468 4,599,876
License Fees 88,900 _ "

Legal & Professional fees 3,001,670 926,525 ••

Office^& General Expenses 1,425,354 1,689,522 ;
Placement charges 2,086.286 629,161 ^
Printing & Stationery 1,030,222 449,885
Stamp Duty & Registration Expenses 116,404 294,000
Rent 22,383,797 8,997,193
Repairs & Maintenance (Building) 929.582 764,003
Repairs & Maintenance (Otheis) 1,679,309 -
Sales Tax - 31,818
Security Charges 2,153,796 944,232
STP Registration & Annual Fees 200,000 275,000
Subscription & Membership 42,715 110,200
Short Term Capital loss 2.527 -
Telephone Expenses 7,520,227 4,545,078
Water Charges 101,668 102,184
Staff Seminar & Conference 362,668 -
165,886,848 81,357,616

SCHEDULE 'M1 : SELLING AND DISTRIBUTION EXPENSES

Advertisement Expenses 1,342,193 666,835
Travelling expense 14,213.038 5,601,922
Business Promotion Expenses 3,857,226 2,485,980
19,412,457 8,754,737
^^1 ''
 Compiled by : Asian CERC Information Technology Ltd.

eClerx Services Pvt. Ltd.

SCHEDULE ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT 31ST MARCH 2007

Schedule 'C'

GROSS BLOCK - AT COST DEPRECIATION NET BLOCK

Additions Deductions / Deductions /
As on Up to Up to As on As on
Rate of Dep As on 31/03/2007 For the year
01/04/200G 31/03/2006 31/03/2007 31/03/2007 01/04/2006
ASSETS % Dui ing the Year Transfer Out Transfer Out

LEASEHOLD IMPROVEMENT 11.35 15,855,287 _ . 15,855,287 478,357 1,612,108 . 2,030,465 13,734,822 15,376,930

COMPUTER 40.00 62,541,681 18,089,021 139,564 80,491,138 24,295,509 18,881,965 25,892 43,151,581 37,339,556 38,246,172

FURNITURE FIXTURES 18.10 18,274,379 2,068,632 20,343,01 1 4,807,960 5,960,858 - 10,768,818 9,574,193 13,466,419

OFFICE EQUIPMENTS 13.91 ... 10,552,352 926,452 - 11,478,804 1,198,321 1,925,477 - 3,123,798 8,355,006 9,354,031

INTANGIBLE ASSETS ' ' » 7,978,813 6,764,691 _ 14,743,504 3,475,952 3,766,715 . 7,242,667 7,500,837. 4,502,861
(COMPUTER SOFTWARE)

TOTAL 115,202,512 27,848,795 139,564 142,911,743 34,256,098 32,147,123 25,892 66,377,329 76,534,414 8JL946.414

Previous Year 52934771 62,267,741 - 115,202,512 '19,112,649 15,143,449 - 34,256,098 80,946,414 33,822,122

Intangible Assets have been depriciated at 40% but where the useful life of the asset is over we have depriciated it completely
 Compiled by : Asian CERC Information Technology Ltd.

eClerx Services Private Limited

SCHEDULE ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT
31s' MARCH, 2007 AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
ON THAT DATE

SCHEDULE I

A) SIGNIFICANT ACCOUNTING POLICIES:

1. FIXED ASSETS:
Fixed Assets are stated at their original cost of acquisition and shown net of
accumulated depreciation. Permanent improvements and Structural Renovations on
leasehold premises we have amortized it over the initial lease period as far as it was
readily ascertainable. Cost includes all expenses incurred, which are incidental to the
acquisition and installation, up to the date the asset is ready for intended use.

2. DEPRECIATION:
Depreciation is calculated on the written down value method in accordance with the
rates specified in Schedule XIV of the Companies Act, 1956.But, in the case of
Intangible Assets where useful life is of the Asset is already over we have written it
off completely during the year.

3. REVENUE RECOGNITION:
Revenue from business process operations on fixed price and fixed time frame
contracts, where there is no uncertainty as to measurement or collectibility of
consideration, is recognized as per percentage of completion method. On time-and-
material contracts, revenue is recognized as the related services are rendered. Cost and
earnings in excess of billings are classified as unearned revenue.

4. INVESTMENTS:
Current Investments are carried at lower of cost or net realizable value. Long Term
investments are stated at cost. Provision for diminution in value of long-term
investments is made only if such decline is other than temporary in the opinion of the
management. - •

5. EMPLOYEES RETIREMENT BENEFITS:

Gratuity has been provided in the books on the basis of Actuarial Valuation.

6. PROVISION FOR TAXATION:

i. Provision for current tax is made in accordance with Income Tax Act, 1961.

ii. Provision for Deferred tax in respect of timing differences that originate during
tax holiday period and reversible during the tax holiday period has not been
made as the company is a Software Export Company registered in a Software
Technology Park enjoying deduction U/S 10A.
 Compiled by : Asian CERC Information Technology Ltd.

7. FOREIGN CURRENCY TRANSACTIONS:

i) Foreign Currency Transactions are recorded at the exchange rates prevailing as
on the date of the transaction.

ii) Assets and Liabilities denominated in foreign currency are translated at the
exchange rates prevailing at the year-end date.

iii) All the exchange difference arising on translation of assets and liabilities at the
year-end rate are dealt with the Profit and Loss Account, except those arising
on account of acquisition of Fixed Assets before l sl April 2004, which are
adjusted in the cost of Fixed Assets.

iv) Company uses forward contracts and options to hedge its exposure to
movements in foreign exchange rates. The use of these foreign exchange
forward contracts & options reduces the risk or cost to the company and the
company does not use the foreign exchange forward contract or option for
trading or speculation purposes.

8. EARNINGS PER SHARE:

Basic earning per equity share has been computed by dividing net profit after tax by
the weighted average number of equity shares outstanding for the period. Diluted
earning per equity share has been computed using average number of equity shares
and dilutive potential equity shares if any outstanding during the period. The company
records the gain or loss on effective hedges in the Profit & Loss A/c.

9. EMPLOYEE STOCK OPTION & OWNERSHIP PLAN:

The employee compensation expense (i.e. the difference between the fair value & the
exercise price) is being be written off over the vesting period of the approved ESOP
plan.

(B) NOTES TO ACCOUNTS:

(i) In the opinion of the Board, the Current Asset, Loans and Advances are approximately
of the value stated if realised in the ordinary course of business. The provisions for all
known liabilities are adequate and not in excess of the amount considered reasonably
necessary.

(ii) The company has been advised that provision of provident fund and E.S.I.C. is not
applicable to the company. \

(iii) Foreign Currency: As on As on

31.03.2007 31.03.2006

Earnings
Export on F.O.B. basis 795,415,476 441,268,796
Outgoings
Traveling 1,913,018 676,370
Import of Capital Goods (C.I.F. Basis) 16,018,277 9,393,798
Professional Fees 51,060,092 33,313,800
Advertisement Expenses 646,453 NIL
Recruitment Charges 10,285,000 NIL
Contract Charges 7,295,150 NIL
 Compiled by : Asian CERC Information Technology Ltd.

Related Part Transaction (AS 18):

Sr. Name Nature of Amount Relationship
No. Transaction (Rs.).
1 Eclerx U.K. Ltd. Contract for Services 26,558,960 Company under
Same management
Eclerx LLC USA Contract for Services 51,940,200 Company under
Same management
Innovative Impex Contract for Services 600,000 Common Director
4 P. D. Mundra Remuneration 8,800,000 Director
5 P. D. Mundra Loan taken & repaid 39,200,000 Director
6 P. D. Mundra Dividend 80,838,000 Director
7 Anjan Malik Dividend 81,000,000 Director
8 B. K. Mundra Dividend 162,000 Director
9 Duncan Stratton Rent 205,800 Common Director

v) Lease Accounting (AS 19):

The company has taken premises on lease under "Operating Lease". The total lease
amount payable, over the expiry of the lease period has been recognized as an expense
on straight-line basis in Profit and Loss A/c.

vi) The company has been sanctioned term loan of Rs. 3,75,00,0007- and working capital
of Rs. 3,00,00,000 from Kotak Mahindra Bank having a first and exclusive charge on
existing and future fixed assets and current assets. However, the company has not
availed the loan sanctioned.

(vii) Directors Remuneration: As on As on

31.03.2007 31.03.2006
(a) P. D. Mundra 88,00,000 1,80.000
(b) Anjan Malik NIL 1,80,000

(viii) Auditors Remuneration As on As on

(Including Service tax): 31.03.2007 31.03.2006
(a) Audit Fees 56,120 56,120
(b) Tax Audit & Fringe Benefit Audit Fee? 56 !20 39,284
(c) Taxation and other matters 56', 120 80,194

1,68,360 175,598

(ix) Earnings Per Share:

Current Year Previous year
Profit After Tax 396,725,927 244,622,849

Weighted average number of equity 1,012,500 10,18,853

Shares at the beginning of the year

Weighted average number of equity 1,012,500 10,12,500

shares at the end of the year

Face Value of each equity share 10

Basic / Diluted earning per share 392

 Compiled by : Asian CERC Information Technology Ltd.

(x) The company is engaged in business process outsourcing (BPO) services. Hence, it
does not have any installed or licensed capacity.

(xi) Other information as required by schedule VI is not applicable to the company.

(xii) Employee Stock Option & Ownership Plan:

The option granted to employee under the ESOP scheme is effective from 01-04-2006
and one more on 01-07-2006. Fair value method has been used for valuation to
account for ESOP. The vesting period ends on 01-04-2009 and 01-04-08 respectively.
The compensation (i.e. the difference between the fair value & the exercise price) will
be written off over the vesting period. For the period ending 31-03-2007,
Rs. 1,37,1807- has been expensed out and corresponding credit to Stock Option
Outstanding.

(xiii) Permanent improvements to Leasehold premises and Capitalization on payment

basis :
The Company has undertaken Permanent improvements and Structural Renovations on
leasehold premises we have amortized it over the initial lease period as far as it was
readily ascertainable. Balance is not quantifiable. Capitalizaton of some fixed assets is
done on payment basis, the effects of the same on financiais is not quantifiable.

(xiv) Foreign currency hedged and not hedged :

The Company has entered into forward exchange contracts the bifurcation of amount
hedged and not hedged is as follows:

Currency Amount Hedged Amount Not Hedged

$ INR $ INR
USD 8,800,000 396,362,840 191,669 8,326,113
GBP -NIL- -NIL- . 6,92,215 59,011,293
AUD -NIL- -NIL- 52,800 1,853,280

(xv) Total of minimum future Lease Payments is as follows :

Particulars Not T.ato- Late** than one year but T „ * _ . . il

than one Year not later than five years. five years
Future Lease Payments. 28,219,073 105,823,851 48,339,657

(xvi) Previous Year's figures have been regrouped and rearranged wherever necessary.

For and on behalf of For and on behalf of

C. M. GABHAWALA & CO . eCIerx Services Private Limite
CHARTERED ACCOUNTANTS

(Biren C. Gabhawala) (P. D. Mundhra) (Anjan Malik)

Partner Director Director
M. No. 40496

Place : Mumbai
Dated : 25th July 2007
 Compiled by : Asian CERC Information Technology Ltd.

eCSerx Services Private Limited

Balance Sheet Abstract and Company's General Business Profile

Registration Details
Registration no. 125319
State Code 11
Balance Sheet Date 31-Mar-07

II. Capital raised during the year (Amount in Rs.'OOO)

Public Issue NIL
Rights Issue NIL
Private Placement NIL
Bonus Issue NIL

(((.Position of mobilization and deployment of funds

(Amount in Rs.'OOO)
Total Liabilities 293,503
Total Assets 293,503

SOURCES OF FUNDS
Paid up Capital 10,125
Stock Option Outstanding 187
Reserves & surplus 283,191
Secured Loans NIL
Unsecured Loans NIL

APPLICATION OF FUNDS
Net Fixed Assets 76,534
Investments 22
Net Current Assets 216,546
Net Deferred Tax Liabilities NIL
Misc. Expenditure NIL
Accumulated Losses NIL

IV. Performance of the Company :

(Amount in Rs.'000)
Turnover (including other incomes) 862,340
Total Expenditure 430,767
Profit Before Tax 399,426
Net Profit After Tax 396,726
Earnings Per Share (Rs.) 392
Dividend Rate (%)
Interim

V. Generic names of Principal Product/Services of the Company

Item Code No.(ITC Code)
Product Description Business Process
Outsourcing

ForjeClerx Services/' t/Ltd.

Place : Mumbai Mundhra) (Anjan Malik)

Date : 25th July 2007 Director Director