AnnualReport2006-07 Prithvi

Prithvi Information Solutions Limited Information Solution ormati ons
9th Annual Report 2006-07
Vision
Prithvis vision is to create a knowledge based global organization in IT sector offering the best in software solutions, services and products that exceed customer expectations.
Mission
Prithvi Information Solutions is a professionally run global organization providing Information Technology solutions that facilitate our customers in accomplishing their objectives. We aim to be the most sought after organization for our
Quality Poli olicy Quality Policy

At Prithvi Information Solutions Limited, we believe quality is not just another goal; it is our basic strategy for continuous growth. We aim for total customer satisfaction and will seek to achieve conformity by carrying out quality awareness activities at all states of development.
customers, associates, partners and investors while fulfilling our social responsibilities. We achieve this by following a practice of aligning the organizations goals with the individual goals of all our stakeholders.
Contents
Redefining productivity ................................. 2 Five Year Financial Summary ........................... 4 Highlights 2006-07 ....................................... 5 What motivates Prithvis breakthrough performance? ...................... 6 A close look at the business ........................... 7 Our process .................................................. 8 Our track record ............................................ 9 Accolades .................................................. 10 What is our business model? ......................... 11 What do our customers want? ....................... 12 Why do our customers trust us so much? ........ 13 What does Prithvi do that sets it apart? ......... 14 Is our growth sustainable? ........................... 15 Drivers for scalable execution ....................... 16 The only asset not on the balance sheet ........ 18 What are our challenges? ............................. 20 What is the outlook? ................................... 22 Management Discussion & Analysis ................ 23 Risks & Their Management ............................ Board Of Directors ....................................... Executive Management Team ........................ Directors Report ......................................... Statement Regarding Subsidiary Company ...... Report on Corporate Governance ................... Certification by CEO and CFO ........................ Auditors Report .......................................... Balance Sheet ............................................. Profit & Loss Account .................................. Cash Flow Statement ................................... Schedules .................................................. Significant Accounting Policies ..................... Balance Sheet Abstract ................................ Consolidated Financial Statements ................ and Accoun of Subsidi ccounts diary Report and Accounts of Subsidiary 30 32 34 35 39 39 48 49 52 53 54 55 61 68 69
Walking Stick Solutions Private Limited ......... 80 Corporate Information ................................. 92
the On the cover

Black pawn with queen's shadow, represents conception of advancement, growth, progress, evolution. Our salient efforts help add to the productivity of our clients. We help them get bigger, better. Indeed, we ensure every stakeholder associated with us rises in stature. We owe it to ourselves that we grow in the process.
Everything that we do should add value to our customers business. We believe that we must help redefine and enhance their productivity. At Prithvi, we have kept our business philosophy simple. We must simplify their business.
Our strength is the ability to radically simplify the processes, improve their decision making tools, enhance operational flexibility and manage their businesses better. We design application software to streamline their operations.
Our intent, our approach to business and our delivery standards have always centered on this overriding principle, and so far we have made a difference to almost all our customers.
The customers in turn, have reciprocated our efforts. We have become a preferred service provider for business process improvements. Our range includes IT and engineering services, and business solutions based on creative analytical thoughts.
The numbers validate Prithvis contribution to the customers. During 2006-07, 92 per cent of our revenues constituted repeat business, and our revenues grew by 68 per cent and net income climbed up by 70 per cent.
We keep it simple. With each customer, we work as if he is the only customer we have. The best attention to detail, care for quality of service, and speed in delivering solutions has enabled Prithvi to work seamlessly with each of them. Translated, we have made an impact on the capabilities and productivity of the customers and helped them to compete better in their markets.
Annual Report 2006-07
From the Desk of Chairperson
Redefining productivity
Dear friends,
We have had another successful year, and I am happy that we as a team responded to the needs of our customers, improved relationships and created a strong platform of growth for the future. I am indeed happy that Prithvi has been awarded by the Federation of Andhra Pradesh Chamber of Commerce and Industry (FAPCCI) for Excellence in Information Technology Sector for the year 2005-06. It is gratifying to observe that the Company has been recognized by the highly respected industry association, NASSCOM which has listed Prithvi as part of the top twenty IT companies of the country. As always, we focused on fuelling our customer's businesses with innovative thinking and materials. I and our team have strived to make a difference to the productivity and effectiveness of our customers. I believe we do well because we do the basics right. We listen to the customers, understand their information needs, and figure out the impact they wish to make on their customers. We think with them, examine the options and offer solutions that are easy to deploy and maintain. The customer is able to perceive the difference we make to their decision making and the impact on their business using our applications. We have always provided flexibility in operations to the customers, offered fail-safe applications, improved their interface with their market, and added value to their business. We see meaningful sustainable growth is the result of the consistent pursuit of excellence in all phases of our business. Our operational matrix is simple, we stay near the customer and think for them. We shall underscore this approach in future as well. We have a reasonably good spread of clients in the US and will strive to remain the preferred partner for our clients, staff and shareholders.
Mr. V. Satish Kumar, Managing Director received the award for Excellence in Information Technology Sector from the Honble Chief Minister of Andhra Pradesh Dr. Y. S. Rajashekar Reddy.
Looking ahead, we shall deepen our customer base in North America as well as widen the geographical reach by exploring the huge opportunities in Europe, Middle East and India. We shall replicate our success in these markets as well. We are committed to empowering the remarkable potential of our worldwide talent pool - people who can accomplish anything they set their minds to. We shall build on the excellent team that we have. Within the organization as well, we have kept the basics right. We make things simple and open. This means freely sharing information and welcoming the involvement of employee ideas. We believe in a team effort. Prithvi is determined to be not only the supplier of choice but the employer of choice as well. Future strategies include pursuit of organic and inorganic growth. While inorganic growth will help fast track the Company and unlock values, we shall ensure that there is synergy of operations with ability to deliver applications and solutions that exceed customer needs. We see strong competitive conditions in the future. At Prithvi, we have a capable and exciting team that is keen to raise the bar and deliver innovative solutions. We shall continue to reciprocate the trust of our customers and offer them the best of products and services. I am confident that we shall yet again meet the challenges and offer value to every stakeholder associated with the Company. I would like to thank our dedicated and talented staff who continue to be innovative and drive the Company forward, thereby enabling delivery of our strategy and ensuring long term growth. Most importantly, I thank all the investors who have stood by the Company and gave tremendous support and confidence for the good work being done by the Prithvi Team. Warm regards Madhavi Vuppalapati
Five Year Financial Summary

Rs. Millions
2 002-03 2003-04 2004-05 2005-06
2006-07
CAGR CAGR for 5 yrs

(%)
Revenues Operating Profit (EBIDTA) Income before Taxes Provision for Taxes Net Income Retained Profits Share Capital Reserves Net Worth Return on Net Worth (%) Earnings per Share (Rs.) Dividend (%) Book Value (Rs.)
1946.53 218.62 215.40 7.68 207.72 207.72 60.70 473.03 531.92 39.05 34.22 87.63
2467.65 186.83 182.13 0.14 181.99 181.99 60.77 655.48 715.34 25.44 29.94 117.71
3051.28 293.28 288.47 0.04 286.43 286.90 60.77 942.38 1003.15 28.60 47.21 165.07
4560.69 569.73 535.79 2.36 533.43 481.91 180.77 2750.23 2930.99 18.20 37.77 25 162.14
7623.96 1008.46 912.04 5.59 906.45 843.07 180.77 3593.29 3774.06 24.02 48.98 30 208.78
40.65 46.50 43.30 44.50
Highlights 2006-07
Revenues
Rs.Million
EBIDTA
Rs.Million
Net Income
Rs.Million
7624
1008
3051
4527
570
293
05
06
07
05
06
07
287
05
533
06
906
07
Net worth
Rs.Million
EPS
Rs.
Book Value
Rs.
3774
47.2
2931
37.8
49.0
165
1003
05
06
07
05
06
07
05
162
06
209
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What motivates Prithvis breakthrough performance?

The Company has always focused on
Customer perspective Customer perspective Every effort made is towards capturing the expectations of the customers and adding value to their business. Customer retention is strong. Customers have reciprocated with repeat business. Grow with each customer. There has been increasing billing with each customer and the number of customers with more than US$ 2 million US$ has climbed to 37 from 17, and 2 have migrated to more than US$ 5 million as at year end. Intern process ternal Internal process perspective Considerable efforts are made to improve internal processes by creating Centers of Excellence that generate innovative solutions for perceived client needs. Communication within the organization is two way, with high levels of transparency and openness, and empowerment of the associates to take the ball and score. Learning Learning perspective Untiring efforts training associates, which add skill value and improves the ability to innovate. Financial anci Financial perspective Net earnings have been improving year on year and shown a CAGR of 49.5 per cent. Long term sustainable growth and earnings with a higher than industry average improves shareholder value.
A close look at the business

The team at Prithvi is aware that they make a difference to the customers. They bring to the table solutions that make it easier for the customers to do business.
The business processes and deliverables are built on a strong foundation of accountability, transparency, ethical values, and fairness across all operations.
A strong platform of technology is present and backed by an empowered and committed reservoir of human resources and a vision to create a robust technology company. Management bandwidth is large enough and converts opportunities into improving business fundamentals.
Nothing is taken for granted, and efforts are made to power the business forward and meet the emerging challenges. Periodically, some of the basics are re-examined to ensure that the organization remains on the projected trajectory of growth.
The Company has had an accelerated pace of growth, and sees the potential for maintaining the trend over the foreseeable future.
It will be interesting to take a brief note of some of the building blocks to get a perspective on the momentum within the Company. In this context, let us examine - What is our business model? What do our customers want? Why do our customers trust us so much? What does Prithvi do that sets us apart? Is our growth sustainable? What are our challenges? What is the outlook?
Our process
At Prithvi, we offer customized information technology (IT) and engineering solutions to clients across a host of technologies and platforms, convert data into information, become the think tank for customers and strive to add value to them.
As a process, we focus on information, analyze and research to find meanings and patterns, and offer multiple solutions that enhance the business interface of customers.
We want our customers to grow and we believe that we will grow with them; our goal is to be their back-office and seamlessly merge to become their extended arm.
Prithvi is a six sigma practitioner and bench marks itself with the best in the industry on quality assurance. We are on-shore, customer centric, and are aligned with customers; we are often a phone call away.
We derive organizational strength from our backbone of competent and capable associates. Team Prithvi believes in taking the initiative in contributing to its customers. Our ability to retain the best talent is seen in high motivation levels and low attrition.
Our track record

and milestones
1998 Founded in 1998 2000 Among top 40 companies from the State of Andhra Pradesh First overseas office in USA 2001 Ranked as the 6th largest exporter in state of Andhra Pradesh for the year 2001-02 First government order in the State of Ohio 2002 ISO 9001:2000 certified Achieved US$ 25 million in revenues Received of "Business Initiative Directions Quality Summit Award" for "Excellence and Business Prestige" in Gold Category for the Year 2002 2003 Stood as the 19th largest exporter in India for the year 2002-03 Stood among the top 10 service providers in Pennsylvania by Pittsburgh Technology Council (PTC) Collaboration with Micro Strategy 2004 Partnered with market leaders such as Microsoft, Sybase, Teradata, Novel etc in their respective areas
2005 Revenues crossed US$ 50 million Rated by Dun & Bradstreet 5A2, which translates to a good rating Initial Public Offering Ms. V. Madhavi, the Chairperson, received the Best Woman
Entrepreneur Award 2005 from the Federation of Andhra Pradesh Chamber of Commerce and Industry (FAPCCI) 2006 Revenues crossed US$ 100 million Acquired first company in IT space Awarded for Excellence in
Information Technology Sector for the year 2005-06 by the Federation of Andhra Pradesh Chamber of Commerce and Industry 2007 Revenues crossed US$ 178 million Placed an FCCB issue and raised US$ 50 million 4 Ps Business and Marketing, presented Prithvi with the
Certificate of Appreciation for being the 4 Ps Power Brand 2007 Ranked as the 17th largest IT service exporter in India in FY 200607 by NASSCOM, the chamber of commerce of the Indian IT software and services industry
Accolades
NASSCOM has listed Prithvi as part of the top twenty IT companies of the country.
Awarded for Excellence in Information Technology Sector for the year 2005-06 by the Federation of Andhra Pradesh Chamber of Commerce and Industry (FAPCCI).
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What is our business model?

We are in the business of converting knowledge into information solutions and help improve the performance of our customers' businesses. We work closely with the customers to understand their business and their needs, and use technology to find business solutions. Prithvi is a high end technology company in the IT and Engineering Solutions business and provides enterprise software to several service, trade and manufacturing sectors. Primarily, we address six industry verticals: Telecom Retail Life sciences Banking and financial services (BFSI) Hi Tech, and, Government We at Prithvi are open in communication with Our knowledge capital and state-of-the-art skills and competencies are in five service lines: Enterprise solutions Engineering solutions the customers, transparent in dealings and passionate about our exacting standards of performance. We hold ourselves accountable for creating tangible value. Our strength is the ability to understand the customers' business, their vision and complex challenges of technology and provide scalable solutions. Prithvi simplifies and streamlines operations and processes for the customers and enables them to maximize their business impact. Prithvi's competitive edge is its reservoir of skills with industry specific capabilities. This makes it easier to respond to customer needs and deploy professional associates who create and manage solutions Business intelligence Technology outsourcing, and, Process outsourcing
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What do our customers want?

Team Prithvi has made a difference to all of its customers by being the best solution provider. We have wired them, interconnected their enterprise, enhanced their ability to respond to their customers and helped them run their business more efficiently. We connect the dots around the interests of the customers. After all, customers are not only buying technology or process from us; they're buying a solution. We have a simple way to do that. We ask what they want and listen carefully to the answer. We are able to dissect what every customer says, and strive to put that into action. We recognize that customers need a sturdy IT platform that helps them expand their business. A hospital needs accurate patient information to provide the best health care. A telecom company needs networking and radio frequency that works under all circumstances. These are some of the IT services that Prithvi provides to its customers. It is not enough that we intermediate their business. They need reliability. We ensure that we provide fail-safe operating systems. Customers want consistency and a common way to access their information for all of their products at different locations. They require assistance to function efficiently, seamlessly and less bureaucratic. They need information that helps in decision making, and want a simple model to improve their productivity. We at Prithvi understand these requirements and provide such solutions. Seen in perspective, we support our customers and enable them to compete better in their markets.
We made a difference to them

Customer domain
Major Health Care service provider
Impact made
Prithvi team reduced customer service handling time by almost 30% by suggesting and implementing workflow rule engine, clinical rules engine, bar coding, and document management techniques.
Major Health Insurance player
Prithvi Team improved medical prior authorization process by a significant 40%.
Fortune 500 Telecom leader
Prithvi Team helped to reduce total cost of ownership and improved performance and problem resolution time.
Large Bank
Prithvi Team improved peak time availability of Customer Information System from 92% to 96%.
Big Retailer
Prithvi Analytics Solutions helped to improve customer profitability and retention.
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Why do our customers trust us so much?

At Prithvi, we believe that the best certificate that the customer gives is a repeat order. Its a confirmation of our relationship and the impact that we have made so far. During the financial year 2006-07, 92 per cent of the revenues were accounted for by repeat orders. Over the years, the track record has been uniformly high percentage of business from existing customers. On every assignment, we examine the need of our customer and the interface our solutions should have to their decision making applications. Prithvi team customizes the solution and ensures that the customer gets greater value in return. Transparency in dealings and being accountable to the customers through the transactions and processes has often led to better understanding, and satisfactory outcomes. Unparalleled execution abilities has been a visible edge and a differentiator. Prithvi's consultants have years of experience in working with decision makers and bring strong skills and proven frameworks to synthesize a good idea into business value. They consider every aspect of the problem from the underlying business processes to possible change management issues. While implementing them, they take on-board various technology options before fashioning unique solutions. Customers recognize Prithvi's strong technology competencies and deep understanding of how businesses operate and strategize. The ability to advise on defining, optimizing and implementing IT solutions that meet their objectives gets translated into building long term relationships.
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What does Prithvi do that sets it apart?

Quality is an obsession at Prithvi. The Company has been able to consistently provide industry best practices in all its business segments of business consulting, process outsourcing, network solutions, technology outsourcing and business intelligence solutions. The Company practices Six Sigma and Kaizen, which facilitate in delivering and improving reliability standards. The passion for delivering quality is predominantly visible in the comprehensive understanding of our customers business needs, providing solutions on time and the transparency demonstrated to our customers. This seamless approach of reviewing requirements from the customer angle has enabled the teams to provide what is expected. On several occasions, the project teams have been innovative and converted underlying information into analysis that has improved performance. They have been able to resolve complex tangles of business and technology signals to distinguish opportunities. At Prithvi, the team believes that cost-based productivity is not as important as the need for value addition to the customer. We simplify their IT architecture making it more flexible, costeffective, while also bridging the gap between information, applications and business decisions. The critical differentiator is our ability to redefine and improve productivity as seen by the customers.
Differentiators enti Differentiators

Global delivery Model
Impact made
Unique blend of local management supported by remote delivery, resulting in reduced cost and time-to-market for the client
Flat, field-oriented management structure, both flexible and adaptable Proven track record in nurturing long term relationships
Enabling nimble response to the client
Prithvi has implemented some of the most complex projects for the Fortune 500 companies onsite, offsite and offshore
Rapid adoption of quality processes
ISO achieved, SEI CMMI Level 5, Six Sigma and PCMM well initiated
Customer focused Project Management
Excellent execution capabilities, quality/metrics focus and best of breed delivery capabilities leading to successful projects with very attractive cost advantages
Integrated solutions
IT consulting and one-stop shop for technology requirements
Foothold and household strategy
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Is our growth sustainable?

Prithvi has grown its revenues at a CAGR of 40.65 per cent and its net income by 49.5 per cent during the past five years. Care has been taken to improve EBIDTA margin over the years, while ensuring topline growth. Long term growth plans include scaling up operations, widening the geographical reach, continual improvement in speed of delivering solutions and building up a bank of highly motivated human resources. The addressable market size is estimated to be around US$ 300 billion by 2010. Opportunities for the best in the IT industry will keep growing. It is estimated that the industry will grow annually by 28 to 30 per cent. We target our growth to be at 1.2 times the industry average. This target is achievable as we make changes and reinvent our own organization. Prithvi exceeds the competition by delivering software from large data centers and developing new ways to market and service our customers. In order to stay on course, we will strive to find better access to top talent and new markets. The Company is also cognizant of temporary imbalances in supply and demand for skilled People. Hence Prithvi will ensure that recruitments are completed slightly ahead of requirements. Every effort will be made to augment growth. Prithvi will utilize the proceeds of the recent FCCB issue to invest in overseas development centers as well as acquiring analogous outfits that have synergy and potential. The Company has a large market to work for and will capitalize on the increasing opportunities. Prithvi is a high energy organization and will keep the momentum of growth. New milestones will remain a top priority.
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1. Superior talent management 2. World class processes & systems 3. Flexible delivery models 4. Infrastructure
Scalable execution
Drivers for scalable execution

Prithvi has been a focused customer-centric solutions provider. This emphasis is being sustained by setting up of The Centers of Excellence. These Centers find innovative ways to offer customers the following: New alternatives More flexibility for operating systems and processes Support in streamlining their operations Assist clients to become more effective The Company has inculcated increased focus on business excellence and process driven activity in order to optimize resource utilization. Opportunities are prioritized to utilize resources and improve the ability to compete. Prithvi increasingly adopts and adapts by learning from our partners across the globe, benchmarking practices all the while enhancing the level of performance. This increased focus enables Prithvi to change mindsets, lead innovation and growth and overcome the threat of managerial inertia and obsolescence. The organization is steadily moving to a stage where it can compete globally and drive better value for the Company.
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Superior talent management
Recruit best people from top 15% of schools Empower associates with the latest in training skills
World class processes & systems
Quality Process ISO Six Sigma Malcolm Baldrige Process PCMM PMI Framework Management Processes Knowledge Management Processes Process Innovation
Flexible delivery models
Staff Augmentation Model Special Team Model Co-source Model Project Model Portfolio Model end to end engagement Model
Infrastructure
4 Global Delivery Centers Disaster Recovery & Business Continuity Processes in place
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The only asset not on the balance sheet

Information Technology is people driven business and we are only as good as our people. At Prithvi, we have strived to ensure that we start quality from recruitment stage, and treated our associates as the best asset that we have. At recruitment stage, the focus is on matching the needs of customers. The new associate is selected carefully for his/her ability to focus on enhancing performance, scalability on the job, ability to innovate and passion to excel. Becoming a Prithvi associate is not easy. The exciting and energetic project teams at Prithvi have succeeded because they do not believe they are running an IT company. They align with the customers and think with them. They simulate the clients' work to understand the needs. For instance, our associates believe they are in a financial-services company that supplies solutions to their customers around their financial needs; they are part of a telecom company that tailors solutions to their customers around their networking and radio frequency needs, etc. The project teams do not graft solutions on the customer. They are integrating technology and operations, from beginning to end, that really serves customer needs. The ability to view the larger canvas and customize solutions results in Prithvi delivering visibly high productivity and greater effectiveness. Continual success is a great motivator.
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Favorable work environment, open culture, empowerment and transparency in dealings encourage the 1700 strong team at Prithvi to capitalize on the freedom to think, and unleash its intellectual capabilities. Team Prithvi has often exceeded customer expectations. The organizational credo is to inspire associates to change along with the market demands and manage moving targets - through new educational opportunities, ambitious and challenging goals, and an environment that supports and rewards creative thinking. They are empowered to take the ball and score, and almost always the Prithvi team has won what they set out to do. Training programs describe the competencies required for success, illustrate different career roles and paths, and show how individuals can develop critical skills. They are encouraged to make change happen, to innovate and visualise what suits the customers under changing market dynamics. The high performers are recognized by sensitively made out programs which include membership to the CEO Club. Communication is open with all associates. They are encouraged to take leadership roles. Empowerment on assignments often excites the innovative instincts of the associates. Every team member is made to feel valuable. Associates find Prithvi a fun place to work. Organizational challenge will continue to be transformational, to be a differentiator and to inspire associates to think out-of-the-box. As at present, high motivation levels will be pursued to maintain the excitement. People management is a top-down process and will remain the operating priority.
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What are our challenges?

As the Company keeps growing at the present rate, the carefully crafted cutting edge needs to be maintained in its visibility and deliverables. The present strengths need to be institutionalized to help replicate success with every customer. The Company will need to address a few critical issues. How do we become more adept, nimble, innovative and scalable than we are today? How do we train our associates so that they have the best skills in the business? How do we organize ourselves so that we are delivering all of the firm's capabilities in the ways clients want them delivered? Prithvi will continue to proactively bring new ideas about how technology can help the customers compete more effectively. Management capabilities will change from operational skills to strategic ones, from short-term horizons to longer-term ones, from IT communications to business communications. Aligning IT and business strategies will remain one of the most significant challenges. As at present, it will be imperative to respond with speed on issues confronting the customers' businesses. Similarly, we at Prithvi need to think through the implications of systems trade-offs, on a business-unit level, for planned implementations.
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Align with cu stomer. Focus. Analyze. Research. Simp lify. Streamline. Innovate. C u st o m iz e so lu ti o n s. B e th e re fi rs t. Redefine produ ctivity. Add va lue. Exceed expectations. Deliver on tim e. Wow the c u st o me r. B u il d re la tionsh ip s. L e a rn . Scale up. Part ner. Acquire. Grow. Add shareholder valu e. Do it again. And again.
The ability to attract and retain talented people will remain a challenge. Similarly, the Company will systematically examine how tools and processes can be improved, how we turn our global footprint into an integrated platform operating from strategically situated centers of excellence, and how we enhance training and career opportunities to attract and retain the best workforce. The answer is in making effective changes within Prithvi by ramping up the ability to deliver software from large data centers and multi locations and create patterns and meanings that meet customer needs. The Company is positioned well to address these challenges, even as it is reinventing its systems, processes and priorities. Corporate objectives are to convert the vast demonstrated strength of the Company to enhance shareholder value and improve operating margins, add financial muscle and be a preferred investment choice.
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What is the outlook?

At Prithvi, we have scaleable infrastructure and people skills. We have never hesitated to be manned for tomorrow. This is an organization that is prepared to meet the challenges in the global marketplace. We are well positioned to capitalize on the many new market opportunities that are being presented to us because we are an organization that has invested wisely, motivated and well-trained, and driven to be the best in our class. We believe in partnerships with our customers - we understand them, their needs and strive to work for enhancing their business value. As a Company, we focus on thought leadership and effective knowledge sharing as we power ourselves towards outcomes, efficient delivery systems, and contribute to the business strategies of our customers. The market size is large and growing. Emphasis at Prithvi will be to grow at a calibrated pace without compromising on quality and deliverables. Efforts will continue to improve operating margins, from both on-shore and off-shore global delivery centers. Every stakeholder associated with the Company would find their expectations exceeded.
The road map

Enhance the pace of innovative and competitive response to opportunities for growth while addressing cost of operations. Grow in size organically at 1.2 times the industry average. Ensure the bottom line rises faster than the top line. Be a research partner for Fortune 500 customers. Expand reach in markets which are new to outsourcing (Europe, Middle East, India). Acquire firms with boutique solutions for skill enhancement and customer penetration. Have strategic and meaningful partnership with similar size vendors to leverage their domain capabilities. Become a one-billion company denominated in dollar terms by 2012.
Grow to be a sizable player in the outsourcing market
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Management Discussion & Analysis

INDUSTRY INDUSTRY OVERVIEW India has been a strong IT solutions provider across the world. Indian companies in the software industry have demonstrated their competence and have carved out a large slice of the consistently increasing global business. The industry has seen a robust growth in software business and the forecast is a CAGR of 30 to 32 per cent over the next few years. While India does face competition, NASSCOM, the industry association has put it in the right perspective when it reiterates, the experience of global corporates in finding India as the best source for IT solutions. Several other locations have been presented as alternate options for offshore outsourcing. Yet, feedback received from several multinationals having multicountry operations as well as syndicated analyses comparing the various sourcing locations, has revealed that India continues to offer and deliver the best bundle of benefits sought from global sourcing. With significant potential still untapped, it is expected that the global sourcing phenomenon will continue to expand in scope, scale and geographic coverage. As global delivery matures, multi-location strategies will become the norm and most sourcing destinations, including Great history in software development English Language proficiency Government support and policies Cost competitiveness Strong tertiary education Process quality focus Skilled workforce Expertise in new technologies Entrepreneurship Reasonable technical innovations There are several reasons why India has basic strength. Indian programmers are known for their strong technical skills and their eagerness to accommodate clients. In some cases, clients outsource work to get access to more specialized engineering talent, particularly in the area of telecommunications. India also has one of the largest pools of English-speaking professionals. Some of the countrys strengths need ength Som e o f th e coun trys str en gth s n eed iteration: iterati ation: emerging locations, will grow in size. Building on its existing strengths, India will remain the leading destination and will continue to play an important role in most global sourcing strategies.
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Reverse brain drain Existing long term relationships Creation of global brands Expansion of existing relationships Leverage relationships in West to access overseas markets Indian domestic-market growth Indian companies with track record of exceeding customer expectations are likely to show higher than average industry growth. This trend will be more visible in companies that have solutions which enhance the ability of customers to respond to their markets; that have people capabilities which include innovative mindsets; and those that constantly keep improving their performance standards. COMPANY COMPANY PERSPECTIVE Prithvi Information Solutions is a global provider of customised information technology (IT) solutions and engineering services to clients across a host of verticals/industries, with the bulk of the operations in the U.S. The Company commenced operations as an IT and software solutions provider and has diversified its business into technology, engineering services and knowledge solutions. The Company operates from offshore delivery centers at Hyderabad, Bangalore and New Delhi, India; and has software solutions design and development centers, marketing offices and liaison offices at Pittsburgh, Seattle, Chicago, Los Angeles, Parsippany (NJ) in USA, Singapore, Amsterdam, Dubai and Doha. The Company has 12 offices across the globe and 4 global delivery centers in India. Prithvi provides customers with intelligent IT solutions which enable achieving operational and tactical advantages from the deployment of technology, resulting in strategic benefits for client organisations. The processes aim to follow this guiding principle to focus on understanding the underlying business problems encountered by the client, rather than focusing merely on the technological issues, and then designing a solution based on performing a root cause
analysis of the problem. The solutions offered are characterised by innovation and flexibility, so that they may be customised to suit a particular clients business needs. Prithvi has leveraged strong domain skills and customercentric approach to develop several strategic customer relationships and has built globally a strong sales team with 25 core sales personnel as of December 31, 2006, ably supported by pre-sales and marketing associates. The functional expertise and business solutions cover a broad spectrum of sectors including banking and finance, healthcare, retail, hitech, and telecom sectors. B A CKGROUND CKGROUND Prithvi was incorporated with limited liability in India in 1998, with Ms. V. Madhavi (based in Pittsburgh) and Mr. V. Satish Kumar (based in India) as the initial promoters. The business commenced by providing offshore software development outsourcing services to clients, and has subsequently evolved into a solutions provider serving clients IT, software, business and process outsourcing needs. Since inception in 1998, the Company has grown consistently and has served more than 85 clients in the U.S. and India. The first client was Merrill Lynch and subsequent clients include Sun Microsystems and the State of Ohio, the latter of which engaged the services for a US$ 500,000 project in 2002. Successive clientele include T-Mobile, John Hopkins Hospital, Meijers Inc., PNC Bank, University of Pittsburgh and Wells Fargo Corporation. The Company has adopted a pragmatic and dynamic business model, enabling develop multi-technology and domain expertise. The software solutions are compatible with different technologies such as Sun Microsystems, Microsoft, Oracle, IBM, and with platforms such as SAP and PeopleSoft Micro Strategy. During the eight years since commencing operations, the Company has adjusted its revenue mix to include several and varied industry and customer segments in order to adapt continuously to the changing environment.
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DIFFERENTIAT DIFFERENTIATORS The Company has enormous competitive strengths and has the ability to constantly track and deliver better customer value ahead of the competition. The potential needs to be iterated: Global delivery model, with unique blend of local management supported by remote delivery, resulting in reduced cost and time-to-market for the client Flat, field-oriented management structure, both flexible and adaptable enabling nimble response to the client Proven track record in nurturing long term relationships. Prithvi has implemented some of the most complex projects for the Fortune 500 companies onsite, offsite and offshore Rapid adoption of quality processes Customer focused Project Management with excellent execution capabilities, quality/metrics Focus and best of breed delivery capabilities, leading to successful projects with very attractive cost advantages Integrated solutions, IT consulting and one-stop shop for IT requirements Foothold and household strategy Strong business alliances CORPORATE STRATEGY CORPORATE STRATEGY Prithvis strategy is to maintain and enhance its position in its respective domains. It is proposed to grow in incremental phases by consolidating the strengths and improving the existing facilities. In particular, the Company seeks to:
critical Attain critical size

Achieving critical mass and momentum is important for the Companys long-term survival and growth. The strong presence in the U.S. market will be leveraged to build a client base in other
Metri etrics Employee Metrics

Nos. arch March 07 Total Employees S/W Professionals Billable Trained & non-billable Sales & Supplies Gross addition Net addition Attrition (%) 1747 1685 1650 35 62 197 125 4 March 06 1196 1123 1008 115 73 169 125 4
Geographi Distribution aphic Geographic Distribution

USA India Europe 1244 499 4 1747 868 324 4 1196
25
markets. A healthy mix of organic and inorganic growth strategy will be used to grow in size and expand in businesses which are complementary as well as supplementary to the existing business. Acquisitions will give new clients and new business whereas Prithvi is looking for increasing revenues from the current customers by getting larger contracts and providing a bigger basket of products and services to them. It is proposed to pursue those transactions that are related to the Companys key strengths, provide synergies, and have manageable integration risks.
offerin solution ffering ons improvin margins through incr oving argin creased offshoring ffshorin Deliver value offering solutions while improving margins through increased offshoring
The Company aims to deliver value driven quality solutions by increasing the offshore component in the assignments substantially. The objective is to continue to provide what the customer wants, deliver effective quality solutions even as the development work is done offshore. Prithvi will attempt to lower development costs and improve margins. An offshore development center is being set up at Hyderabad, India, which is expected to be completed in 2008. The center will provide for seating 2,500 associates which will enable the Company to achieve cost savings and margin improvements. The break down of the expected seats available at offshore development facilities in India is shown in the table below. of for the calend No. of people (seats) for the calendar year Location Secunderabad Hitech City Bangalore Pittsburgh Gachibowli ODC, Hyderabad Total 165 2006 ctual Actual 105 30 30 2007 ctual Actual 50 450 30 45 250 825 2008 Est 50 150 30 30 250 2000 2510
The Company aims to further develop its expertise in products and solutions across domains and technologies in order to minimise the dependence on any single revenue stream or industry or client segment. Prithvi will expand into new areas such as biotechnology and e-Governance to stay ahead of the competition. A partnering arrangement/alliance has been arranged with the Carnegie Mellon University to co-develop solutions for the bio-technology sector. The Company also proposes to leverage its strong presence in the US government sector to expand the range of e-Governance solutions.
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other geographies eographi Diversify to other geographies

The Company intends to grow its business in geographies other than U.S. as well. Presently, clients are being served primarily in the U.S. who accounted for more than 99 per cent of the revenues for the years ended March 31, 2004, 2005 and 2006. The Company has recently set up marketing offices at Amsterdam in Europe and in Middle East countries and has been successful in bagging a few projects in these regions. Efforts are ongoing for opportunities in other countries, building up relationships with new clients and deepening the existing relationships with clients in the U.S., Europe, Middle East and India.
clien relationships ent elation Deepen client relationships
Clien Contributi ent tribution Revenue Client Contribution to Revenue

(%)
arch March 07 Top client Top 5 clients Top 10 clients Repeat business 8.58 19.47 31.11 92.87
March 06 8.63 22.86 34.11 86.65
Prithvi has strong client relationships and repeat business from the existing customers constitute an important revenue opportunity. As at March 31, 2006, out of the 65 active clients, for whom one or more projects were being executed, 60 were repeat clients. In year ending March 2007, repeat business from customers accounted for over 92 per cent of the billing. The Company will seek to increase the revenues generated from the existing customers who have deployed Prithvis services for small projects and specific functions or locations by serving them on an enterprise-wide basis. Further, as new offerings are added to the portfolio of services, cross-selling opportunities to the existing customer base should continue to grow.
Client Data
(%)
arch March 07 No. of active clients No. of Million Dollar clients < 1 Million $ 1 Million $ + 2 Million $ + 5 Million $ + 17 27 37 2 83
March 06 65
17 31 17
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Further develop business allian ances Further develop business alliances

It is proposed to grow and strengthen the technology alliances with leading IT companies, which will assist in sales and delivery. Presently, Prithvi has business alliances with companies such as Microsoft, Micro Strategy, Teradata, Pervasive, Silver Mark and Sybase. These alliances typically involve system integration, product deployment and continued support and service and help in getting new clients being the preferred service provider by the partner companies.
Revenue by Service Offering Revenue Service Offering

(%)
March 07 Technology outsourcing Business Intelligence Network Solutions KPO Other Services 44.25 37.50 15.25 3.00 100.00
March 06 48.00 36.00 12.00 1.25 2.75 100.00
competencies, Centers of Excellen and cies cellence Build competencies, Centers of Excellence and invest in R&D
The major strength of the Company is its talented team of associates, and the Company recognizes the need to stay ahead of the curve. Continuous efforts are being made to build competencies and develop cross functional capabilities. The Centers of Excellence have been developed as value creation and innovative think tank units. The associates are encouraged to examine customer needs, value creating processes to be defined and offer innovative and effective solutions. These Centers transform skilled motivated associates and customer information systems into tangible outcomes such as customer retention, revenue enhancers and profits. While the customercentric innovations are developed, these Centers enable the associates to build further on their competencies. PERFORMANCE REVIEW Net Income from Sales/Services Incom from Sales/Services come Gross revenues improved during the year by 67 per cent at Rs.7623.8 million from Rs.4560.7 million. This improved performance is on the base of a 49 per cent rise that was witnessed in 2005-06 as compared to 2004-05.
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The Company has been adding to its portfolio of customers, as well as increasing its billing with the customers. 92.87% of the revenues were from repeat business. During the year, the Company added 18 new customers, including two customers with billings in excess of US$ 5 million. As at end March 2007, the number of active customers were 83 as against 65 a year ago. USA accounted for 99.5% of the revenues and Europe and India constituted for the balance. EBITDA (Operatin pro ating EBITDA (Operating profit) Operating profit for the year was Rs.1008.5 million, up from Rs.569.7 million. This is an increase of 77%. In the year under review, the operating margin was 13.22% as against 12.5% in the previous year. The Company has significantly increased its billable number of associates from 1008 in end March 2006 to 1650 as at end March 2007. Pro Net Profit After tax profits have risen to Rs.906.4 million from Rs.533.4 million. The 70% increase in net profit is a function of higher billing, larger number of associates utilized, increase in offshoring and optimum use of resources.
Revenue Ind Revenue by Industry

(%)
March 07 BFSI Embedded Healthcare Manufacturing Retail Technology Telecom 4.45 1.35 19.77 11.16 7.29 34.18 21.80 100.00
March 06 11.40 2.37 11.97 13.45 9.88 19.65 31.28 100.00
Revenue Project Type Revenue by Project Type

(%)
arch March 07 Fixed Prices Time and Materials 11.87 88.13 100.00
March 06 14.57 85.43 100.00
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Their Management anagemen Risks & Their Management

The Company recognizes its operating and other risks and has been consciously taking effective steps to mitigate all of them. While there are several types of risks, Prithvi identifies them in order to prevent, manage, control and overcome them and takes initiatives to mitigate them.
Information and data security
Deliver Management quality on of market, time customer Competitive pressures
Ability to innovate Intellectual property protection Flaws or defect in products
Customer satisfaction, efficiency and profitability
Resources in relation to strategy Competence and skill of associates
Credit risk Enterprise wide risk Legislation, macro economic pressures
Some of the possible risks that add to the sensitivity of Prithvis operations are described in detail: Risk related to Human Resources
Prithvis success depends largely upon the highly-skilled software professionals and the ability to attract and retain competent managerial personnel. The industry is human capital intensive with a high rate of attrition.
The Company has a proactive approach to its associates and believes that human resources are its best assets. Adequate care is taken to recruit talented and high energy associates with an attitude to serve customers. Motivation levels are high since they are given freedom to think and implement solutions that are best suited for the customers. They are encouraged to learn and develop their work content and are supported to take leadership roles. Effective HR practices have enabled the Company to attract and retain a talented team. While the industry attrition rates are around 15 per cent, Prithvi has been recording attrition rate of 7.5 per cent, 8.0 per cent, 4.0 per cent and 4.0 per cent respectively for the years ended March 31, 2004, March 31, 2005, March 31, 2006 and March 31, 2007. Risk related to high offshoring
Current operations are mainly at client site but going forward, the Company plans to increase offshoring to India. Any failure to successfully implement the offshore strategy, and combine the offshoring services with the existing on-site services, could adversely affect the business, results of operations and financial condition.
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The Company plans to increase revenues from offshoring, as a percentage of the total revenues. As part of this strategy, Prithvi is establishing an Offshore Development Centre (ODC) in Hyderabad with an expected seating capacity of 2,500 employees at an estimated cost of Rs.910 million. The ODC is expected to become partially operational by January 2008 and fully operational by the end of 2008. In order to improve the business, results of operations and financial condition, the strategy is being implemented with a time bound action plan. related economi political, omic and regulatory conditions dition the Risks related to economic, political, legal and regulatory conditions in the U.S.
For the years ended 31 March 2004, 2005, 2006, more than 99 per cent of the revenues were from clients located in the United States. An economic slowdown in the U.S. could adversely affect the Companys business and results of operations, if the clients reduce their IT spending significantly negatively impacting the revenues and profitability.
The Company has been making efforts to improve the geographical spread by seeking new business in Europe, Middle East and India. The customer portfolio is being dispersed, so as to increase the proportion of non-US based clients. Prithvi has been adding to its portfolio of clients within the US as well and improving billing with larger number of clients. The above strategy spreads the risk within United States, even as the geographical reach is being widened. Exchan rate chang Exchange rate risk
Currency exchange rates could undergo change with Indian rupee gaining strength. This could reduce earnings.
The rupee is showing signs of strength in relation to the US$ and the Company is conscious of the possibility of weakening dollar impacting earnings. The Company has very high percentage of its expenses incurred in US$ which neutralizes the impact of the volatility of the currency. Hedging of the dollar is done for part of the revenues to minimise the adverse impact of rupee appreciation on retained profits. Forward cover is been taken as necessary. The Company is also conservative in booking the unfavorable impact as at each quarter on the outstanding receivables. Prudential accounting norms are followed in line with the accounting standards. More important, operating margins are being improved in part by higher billing rates, and in part by offshoring the delivery centers. At Prithvi, the team believes in improving earnings through offering value added solutions to the customers and being seen as the preferred partner by them. This will help drive the margins mitigating the possible currency exchange loss.
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Board Of Directors
Mrs. Madhavi Mrs. Madhavi Vuppalapati Mrs. Madhavi is one of the founders of Prithvi Information Solutions Limited. She is based in the United States and is responsible for the US operations. She holds an M.S. in Computational Mechanics from Carnegie Mellon University, USA and is a B.E from Osmania University, Hyderabad. She has extensive experience, having worked with organisations such as ALCOA Technical Centre, Management Science Associates, KCS Computer Services Inc., Gateway Resources Inc. She guides the strategy at Prithvi and oversees the entire client marketing process. Under her visionary leadership the Company has increased its client base from 3 in 1998-99 to almost 85 at present. She is recipient of several awards, both in India and in the USA.
Mr. Kum umar Mr. Satish Kumar Vuppalapati Mr. Satish Kumar is the co-founder of Prithvi and heads the Indian operations and the executive management of the Company. He is responsible for developing client relations in the Indian sub-continent and Asia Pacific region. He is B.E. from Osmania University, Hyderabad. Mr. Satish Kumar brings to the Company an exemplary enthusiasm and management capabilities, in addition to jointly shaping the Companys growth strategies.
Mr. Srikan Redd Gadd anth Mr. Srikanth Reddy Gaddam Mr. Srikanth Reddy is responsible for coordinating the international operations of the Company. He is based in the US and liaisons between the Indian technical team and various onsite teams working at the clients location. A Bachelor of Engineering from the Osmania University, he has been associated with the South Central Railways in India prior to joining Prithvi and brings with him a strong process orientation to guide the Company.
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Dr. Narang aran Dr. Satyapal Narang Dr. Narang is a Doctorate in Financial Management, besides being a post graduate in commerce and a law graduate. He is also a Fellow Member of Institute of Company Secretaries of India and Fellow Member of All India Institute of Management Association. Presently, he is a Professor of Management and Director of Jagannath International Management School, New Delhi. Before joining this self financing institution, he was a Professor of Management & Law. Earlier, he worked as CEO of the Institute of Company Secretaries of India, New Delhi, for about 10 years. He brings to Prithvi his experience of two decades in financial management consultancy and corporate matters. He has been closely associated in various committees of the Department of Company Affairs, Government of India and SEBI. Presently, he is a member of the Company Law Advisory Committee constituted by the by the Ministry of Company Affairs and is associated with the various Chambers of Commerce such as FICCI, ASSOCHAM and CII. Mr. Omkar Bhon ongir Mr. Omkar Srinivas Bhongir Mr. Bhongir Omkar has graduated from the Birla Institute of Technology and Science, Pilani, Rajasthan, India and has over 16 years of diverse experience in the software industry. He is currently a Senior Director at Sybase responsible for product management, marketing, business development and sales operations. Prior to Sybase, he worked at HCL and Expert Software Consultants between 1989-1992. Mr. Omkar has held various senior management and individual positions in Strategy (Business & Products) etc. and was also responsible for strategic engineering relationship with platform vendors (software and hardware) including IBM, Sun, HP, Compaq, Digital, DG, SGI, BMC, EMC.
Mr. Prasad Mr. S. Lalith Prasad Mr. Lalith Prasad is a Fellow Member of Institute of Chartered Accountants of India and is a renowned practicing Chartered Accountant. Before entering into practice, he worked with M/s. King & Patridge, Solicitors for four year as an Advocate. He has over 20 years of experience in the field of project finance, taxation and legal matters. He is a statutory and internal auditor for several companies.
33
Executive Management Team

Executive Directors Executive Directors
Madhavi Vuppalapati Chairperson Satish Vuppalapati Managing Director Srikan Gadd anth Srikanth Gaddam Executive Director
Name
Designation
of Years of xperien ence experience
Previ evious Previous employer
Delivery
Sridhar Chilumula ankaj Singh Pankaj Singh Hari Goud adhu Bhimavar avarapu Madhu Bhimavarapu Pradeep Dayaram adeep Dayaram Prad Nimlekan anthi Srinivas Nimlekanthi Ganesh Mani CIO (Delivery) Head PMO Delivery Manager - Ecommerce Delivery Manager DB, BI & .NET Delivery Manager, Architecture Head, Testing Services Head KPO 20 9 9 10 11 10 25 Bank of America, USA Genpact NA Bank of America, USA Applabs Convergys Consultancy
Sales
Mohan Ramani enu Mulpuri Venu Mulpuri Kartik Sarwade Sarwade alarapa Malarapa Jack Ruggerio Senior VP (Europe) Senior VP - S & M Asst. VP - India VP Sales, Hi Tech Vertical VP Sales, North Region 16 18 12 10 30 EVoxis Inc., USA Deloitte & Touche Infosys Mvidia Systems
Pre Pre Sales

Chetan Kum umar Chetan Kumar Ambika Mohapatra Ambika Mohapatr ohapatra General Manager, Marketing General Manager, Pre Sales 25 9 Kestone Research IBM
uman Resources Human Resources

Kanung anun Debasish Kanungo S.S. Rao Alma Lampert VP Resourcing Senior Manager, HR India HR Manager 15 10 11 TCS Satyam Morneau Sobe Co
Finance
P.S. Shastry C.R. Dash A.N. Sarma CFO VP Finance Head - Legal & Company Secretary 22 17 22 Karvy Investor Services Sriram Group Karvy Stock Broking
34
Directors Report
Dear Members,
Your Directors have pleasure in presenting the Ninth Annual Report on the business and operations of the Company and accounts for the Financial Year ended March 31, 2007. Financial Results 2006-07 Gross Revenue Operating Expenditure Profit (PBIDT) Interest Depreciation Profit Before Tax Provision for Tax Net Profit for the year Balance B/F from previous year Amount available for appropriation Appropriation opriations Appropriations a. Interim Dividend b. Proposed Dividend c. Tax on Dividend d. General Reserve e. Balance carried to Balance Sheet Earning Per Share Rs. Interim Dividend (%) Final Dividend (%) Dividend The Board has already declared and paid an interim dividend of Rs.2.00 per share on May 5, 2007 on 18,077,000 Equity Shares for the financial year 2006-07, resulting in cash 7623.96 6615.50 1008.46 41.45 54.97 912.04 5.59 906.45 1423.81 2330.26 36.15 18.08 9.15 233.03 2033.85 48.98 20 10 Rs. Millions 2005-06 4560.69 3990.95 569.73 14.20 19.74 535.79 2.36 533.43 941.92 1475.35 27.12 18.08 6.34 1423.81 37.77 15 10 outflow of Rs.36.15 million towards dividend and Rs.6.08 million towards Dividend Tax. In view of your Company's encouraging performance, the Directors recommend a final dividend of Re.1 per share on 18,077,000 Equity Shares of Rs.10 each of the Company in respect of the financial year 2006-07. The final dividend as recommended would involve an outflow of Rs.21.13 million, out of which Rs.18.08 million is towards Dividend and Rs.3.05 million being Dividend Tax. Issue of Foreign Currency Convertible Bonds (FCCBs) Your Company had allotted Zero Coupon FCCBs to an extent of US$ 50,000,000 to Lehman Brothers Europe, London on February 26, 2007 at a conversion price of Rs.469.13 (Rs.44.0900 per US$). The Bonds are due for redemption in 2012. M/s. Edelweiss Capital Limited and Athena Capital Partners, LLP have acted as the Joint Lead Managers. The Bank of New York acts as Trustees for the Bonds. The proceeds of the Bonds will be utilized for the purpose of overseas acquisitions as well as other permitted usages. Your Company has already identified few businesses for acquisition and are being examined for synergy and viability. As soon as the decision is made, communication will be made to the Members and the authorities. The bonds were listed on the Singapore Stock Exchange. Operatin ating Operating Results & Outlook During the year under review, your Company earned total revenues of Rs.7623.96. The US operations continued to be the largest contributor to the revenue stream with a contribution of nearly 99 per cent of the revenue. Members will be happy to know your Company has made an encouraging beginning in Europe, Middle East and India.
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The Profit before Interest, Depreciation, and Taxes for the year was Rs.1008.46 representing 13.23 per cent of total revenue. The net profit for the year was Rs.906.45 million as compared to Rs.533.43 million, an increase of 70 per cent over the year. Your Company has been striving to improve the margins by developing the income streams and by stepping up off-shore services. Presently, your Company's areas of operation include consulting, application software development, maintenance & enhancement, implementation of enterprise solutions, and IT enabled services. During the year, 18 customers were added in all the countries in which it is doing business. Today your Company has significant number of non-Indian employees across its international development centers and offices. During the year, your Company has entered into MOUs with the prestigious educational institutes like the International Institute of Information Technology (IIIT), Hyderabad, etc. for setting up academic centers of excellence in their campuses for computational engineering. The work in relation thereto is expected to begin in the near future. Developmen Centr ent tre Global Development Centre As Members are aware, your Company has been exploring the possibilities of setting up a Global Development Center at Hyderabad. While the land is being acquired, there has been unforeseen delay due to legal issues. Efforts are ongoing to examine all alternative options in a bid to fast track the process of creating a world class facility. uman Resource Developmen ent Human Resource Development Your Company has always endeavored to align its business objectives with those of the individual employees. In an industry marked with high employee attrition, the Company's attrition rate is among the lowest for the year 2006-07, which is around 4 per cent. This has been achieved through a continuous investment in learning and development, competitive compensation, conducive work environment and rewards and recognition mechanism. In order to increase the association of the employees at all levels, an Employees Stock Option Scheme is being implemented on the lines of the Resolution passed by the Members in the Extraordinary General Meeting held on April 29, 2006.
Quality Initiatives Quality Initiatives Your Company values its customers and focuses on ensuring high quality delivery of services. Your Company has been assessed and registered by National Quality Assurance Limited as per the provisions of BS EN ISO 9001:2000 for its analysis, design and development of software and the manpower outsourcing services. Similarly, your Company has received the quality standard certificate from ANSIRAM and is in the process of obtaining the CMMI certification. Awards and Recognition wards and Recognition During the year, your Company has been awarded by the Federation of Andhra Pradesh Chamber of Commerce and Industry (FAPCCI) for Excellence in Information Technology Sector for the year 2005-06. The award has been presented to Mr. V. Satish Kumar, Managing Director by the Hon'ble Chief Minister of Andhra Pradesh Dr. Y. S. Rajashekar Reddy. Subsidiary Companies During the year under review, Walking Stick Solutions Private Limited has become a subsidiary of the Company by virtue of majority shareholding. The accounts of the subsidiary and the consolidated accounts of the Company along with the statement as per Sec.212 of the Companies Act, 1956 are provided in this Annual Report. Directors Directors Dr. S. P. Narang and Mr. Omkar Srinivas Bhongir, Directors retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment. The necessary resolutions seeking approval of the shareholders for their re-appointment have been incorporated in the Notice. Auditors The present auditors M/s. Patwari & Co. have not opted for re-appointment. Therefore the Board of directors have recommended for appointment of M/s. S. R. Batliboi & Co., Chartered Accountants as Statutory Auditors in place of M/s Patwari & Co., Chartered Accountants. In this regard a special notice in terms of Section 190 of the Companies Act, 1956 has been received under Section 225(1) from a Member proposing the appointment of M/s. S. R. Batliboi & Co., Chartered Accountants, as Auditors of the Company in place of M/s. Patwari & Co., Chartered Accountants, Hyderabad.
36
Fixed Deposits Fixed Deposits Your Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet. Corporate Governan and Management ance anagemen Report on Corporate Governance and Management Discussion and Analysis Discussion and Analysis A report on Corporate Governance and Management Discussion and Analysis along with the Certificate from the Auditors, Certificate from CEO / CFO are attached and form part of this report. articulars of Particulars of Employees Information as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in the Annexure and forms part of this Report. The Ministry of Corporate Affairs has recently amended the Companies (Particulars of Employees) Rules, 1975 to the effect that particulars of employees of companies in the Information Technology sector, posted and working outside India and 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 posted and working outside India. Conservation of energy, technology sbsorption, foreign Conservati of energy, technology sbsorption, foreign servation ergy orei chang earnings and outgo exchange earnings and outgo The particulars as prescribed 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, are set out in an annexure to this Report. Directors' Responsibility Statemen ent Directors' Responsibility Statement Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 and based on the representations received from the operating management, the Directors hereby confirm that: i. in the preparation of the Annual Accounts for the year 2006-07, the applicable Accounting Standards
have been followed and there are no material departures; ii. they have selected such accounting policies in consultation with the statutory auditors and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;
iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they have prepared the Annual Accounts on a going concern basis.
cknowled emen owledg ents Acknowledgements Your Directors wish to sincerely thank the investors for the overwhelming response to the company's initial public offer of equity shares and for reposing their faith and trust in the Company. The Directors also wish to thank the company's customers, vendors, business associates and Bankers for their support to the Company. The Directors also thank the Government of India and the governments of various countries, the concerned state governments and government departments and governmental agencies for their co-operation. The Directors place on record their appreciation of the contributions made by every member of the PRITHVI family across the world. For and on behalf of the Board of Directors
Kum umar V. Satish Kumar Managing Director Hyderabad August 29, 2007
Prasad S. Lalith Prasad Director
37
Annexure - I
Particulars pursuant to Companies (Disclosure of Particulars in their Report of the Board of Directors) Rules, 1988 a. Conservation of Energy The operations of the Company involve low energy consumption. However, adequate measures have been taken to conserve energy, wherever possible. b. echnology Absorption, Adaptation and Innovati ovation Technology Absorption, Adaptation and Innovation Expenditure on R&D Since the Company is a ITES company, the amount spent on R&D is not significant compared to the size of its operations. Therefore the R&D expenditure is recognized in the Profit & Loss Account, when incurred. c. Forei Exchan Earnings and Outgo eign chang Foreign Exchange Earnings and Outgo 2006-07 Earnings Earnings Export Sales Outgo Onsite - Software Development and other expenditure Foreign Traveling 6416.67 1.88 3925.37 1.06 7250.49 4506.85
Rs. Millions
2005-06
Specific areas in which R&D was carried out by the Company

Regular up-gradation of technology is achieved through the constant training of all the software professionals.
Benefits derived as a result of the above R&D

The efforts shall result in building competencies in new and emerging technologies.
Annexure Annexure - II
Information as per Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors' Report for the year 2006-07 Rs. Millions Name V. Madhavi Designation Gross Remuneration 8. 12 6.00 5.42 Age & Qualification 36 yrs. MS. BE 33 yrs. BE 33 yrs. BE Experience 13 10 10 Date of Joining Previous employment
Wholetime Director V. Satish Kumar Managing Director G. Srikanth Reddy Wholetime Director
24.07.1998 Gateway Resources Inc., Pittsburgh 24.07.1998 01.06.2005 South Central Railways, India
N otes 1. 2. 3. 4. 5. 6. Gross remuneration includes salary, allowances, perquisites but excludes gratuity unless paid/payable. The nature of employment is contractual and terms of remuneration are governed by the resolutions passed by the Board and Members. Experience includes number of years of service. Mr. V. Satish Kumar and Mrs. V. Madhavi are related to each other being brother and sister. Mrs. V. Madhavi is also the Chairperson of the Company. The details of remuneration paid to employees not being directors working outside the country are not included as permitted by the Government of India Rules. For and on behalf of the Board of Directors Hyderabad August 29, 2007 Kum umar V. Satish Kumar Managing Director Prasad S. Lalith Prasad Director
38
Statement Regarding Subsidiary Company

Pursuan ant Section of the Companies Act, Pursuant to Section 212 of the Companies Act, 1956 Holding Company's Interest: Entire Issued Share Capital Comprising of: Net aggregate amount of Subsidiary's Profit/(Loss) not dealt with in the Holding Company's Accounts Current Financial Year Rs.Millions (40.25)
Name of the Subsidiary
Financial Year Ended
Equity Shares of Rs.10 each fully paid Nos.
Walking Stick Solutions Private Limited NOTE :
31st March, 2007
3,371,550
Net aggregate of subsidiary's loss dealt with in the Holding Company's Accounts: Current Financial Year: Nil
For and on behalf of the Board of Directors Hyderabad August 29, 2007 Kum umar V. Satish Kumar Managing Director Prasad S. Lalith Prasad Director
Auditors Certificate on Compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement
The Members Prithvi Information Solutions Limited We have examined the compliance of conditions of Corporate Governance by Prithvi Information Solutions Limited, for the year ended 31st March, 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges in India. The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that such compliance is neither as assurance as the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. Patwari & Co., Chartered Accountants Patwari Vijay Patwari Proprietor M. No.201653
Hyderabad August 29, 2007
39
Report on Corporate Governance

I. Companys Philosophy Corporate Governan ance Companys Philosophy on Corporate Governance The Company believes that good corporate governance practices should be enshrined in all activities of the Company. This would ensure efficient conduct of the affairs of the company and help the Company achieve its goal of maximizing value for all its stakeholders and becoming a truly global software company while upholding the core values of transparency, integrity, honesty and accountability, which are fundamental for the success of any corporate. The Company is in compliance with the requirements of the guidelines on corporate governance stipulated under Clause 49 of the Listing Agreement with the stock exchanges. The Company has also adopted a Code of Conduct for prevention of insider trading in its shares. II. Board of Directors Board of Directors The Company has 50% of the directors representing the promoters and other 50% are independent directors, having considerable experience in the industry. The composition of the Board is in conformity with Clause 49 of the Listing Agreement entered into with the Stock Exchanges. i. None of the Directors on the Board is a member of more than 10 committees or chairman of more than 5 committees as specified in Clause 49, across all the companies in which he/she is a director. Necessary disclosures regarding committee positions in other public companies as at March 31, 2007 have been made by the Directors. The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and the number of Directorships and Committee Chairmanships/Memberships held by them in other companies is given below. Other directorships do not include alternate directorships, directorships of private limited companies and of companies incorporated outside India. Chairmanship/Membership of Board Committees includes only audit and shareholders/investors grievance committees.
Name Category o.of Board No.of Board meetings held uring the d uring the year 2006-07 Held Mrs. V. Madhavi1 Promoter, Chairperson & Wholetime Director Promoter, Managing Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director 7 Attended 7 No Whether Attended ttend AG last AG M held on 29.09.06 of N o. of Directorships Directorships in other public companies Chairman Member of N o. of Committee positions held in other public companies Chairman Member
ii.
Mr. V. Satish Kumar
Yes
Dr. S. P. Narang
Yes
Mr. Omkar Bhongir 1
No
Mr. S. Lalith Prasad
Yes
Mr. G. Srikanth Reddy Wholetime Director

1
No
Attended through Audio Conference
40
iii. 7 Board Meetings were held during the year and the gap between two meetings did not exceed four months. The dates on which the Board Meetings were held are as follows: April 26, 2006, July 19, 2006, August 30, 2006, September 29, 2006, October 31, 2006, January 24, 2007 and February 26, 2007. iv. None of the Non-Executive Directors have any material pecuniary relationship or transactions with the Company except to the extent of their remuneration. A brief profile of Directors seeking re-appointment is given as an annexure to this report.
b.
To review the Companys systems of internal control and to ensure that adequate system of internal audit exists and is functioning. To investigate into any matter as may be referred to it by the Board of Directors. To recommend the appointment of internal auditors and statutory auditors. To establish accounting policies. To review officers expense accounts To review and approve signatories to various bank accounts. To provide the Companys statutory auditors and internal auditors with the normal and easy access to the Board of Directors. To serve as an informed voice on the Board of Directors in support of the financial and accounting departments of the Company. Other functions as may be assigned by the Board of Directors and applicable statutory enactment. The Committee, inter alia, has reviewed the financial statements including Auditors Report for the year ended March 31, 2007 and has recommended its adoption. In addition, the Committee has also reviewed quarterly results and half yearly results for the financial year 200607, which were subject to Limited Review by the Statutory Auditors of the Company.
c. d. e. f. g. h.
v.
Secretari Standards etarial Secretarial Standards The Institute of Company Secretaries of India (ICSI) has laid down standards on secretarial practices relating to meetings of the board and board committees, general meetings, dividends, etc., The secretarial and the operating practices of the Company are in line with the above secretarial standards. Necessary information as mentioned in Annexure 1A to Clause 49 of the Listing Agreement has been placed before the Board for their consideration from time to time. III. Audit Committee i. Constitution The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the Listing Agreements with the stock exchanges read with Section 292A of the Companies Act, 1956. ii. The Composition of the Au Committee: The Composition of the Audit Committee Independent Directors Independent Directors Mr. S. Lalith Prasad, Chairman Dr. S. P. Narang Prom omoter Director Promoter Director Mr. V. Satish Kumar The Company Secretary acts as Secretary of the Audit Committee. . iii. The terms of reference of the Audit Committee are broadly as under: a. To have discussion with the auditors periodically about internal control systems, the scope of audit including the observations of the auditors and review the periodical financial statements before submission to the Board of Directors. iv.
i.
j.
During the Financial Year, five meetings of the Audit Committee were held on April 26, 2006, July 19, 2006, August 30, 2006, October 31, 2006 and January 24, 2007 The details of attendance by the Members of the Committee are as below:
Name
Category
Mr. S. Lalith Prasad Independent Non-Executive Dr. S. P. Narang Independent Non-Executive
of meetin eetings No. of meetings uring the during the year 2006-07 ttend Held Attended 5 5 5 5 5 4
Mr. V. Satish Kumar Executive
41
IV. IV. Remuneration Committee The Company constituted a Remuneration Committee of Directors on July 28, 2005. The purpose for which the Remuneration Committee was constituted and the general business transacted by the committee was to decide and approve the terms and conditions for appointment of executive directors of the Company and other matters related thereto. olicy: Remunerati uneration Poli Remuneration Policy: The Companys remuneration policy is driven by the success and performance of the individual employee and the Company. Through its compensation programme, the Company endeavors to attract, retain, develop and motivate a high performance workforce. The Company follows a compensation mix of fixed pay, benefits. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and commission (variable component) to its Managing Director. The Remuneration Committee decides on the commission payable to the Directors out of the profits for the financial year and within the ceilings prescribed under the Companies Act, 1956, based on the performance of the Company as well as that of the Managing Director. The Committee presently, comprises of three members, Mr. S. Lalith Prasad, Dr. S. P. Narang, and Mr. V. Satish Kumar. Mr. S. Lalith Prasad is the Chairman of the Committee. The Company Secretary acts as Secretary of the Audit Committee. Details of remuneration paid/payable to Directors for the financial year ended March 31, 2007 Rs. Million Name Ms. V. Madhavi Mr. V. Satish Kumar G. Srikanth Reddy Dr. S. P. Narang Mr. Omkar Bhongir Mr. S. Lalith Prasad osition Position Chairperson Managing Director Wholetime Director Non-Executive Director Non-Executive Director Non-Executive Director Remunerati uneration Remuneration 8.12 6.00 5.42 0.30 0.30 0.30 Sitting Sitting Fees 0.06 0.06 Total 8.12 6.00 5.42 0.36 0.30 0.36
None of the Non-Executive Directors hold any shares in the Company. V. Share Transfers Grievan evance Share Transfers / Investors Grievance Committee i. A Share Transfers / Investors Grievance Committee of Directors was constituted on April 19, 2005. Mr. S. Lalith Prasad is the present Chairman of the Committee; Dr. S. P. Narang, Independent Director and Mr. V. Satish Kumar, Managing Director are the other members. This Committee deals with and approves all share transfers, transmissions and also all other matters relating to investor relations and grievances. The Company Sercretary acts as Secretary of the Share Transfers / Investor Grievance Committee. Meetings and Attendance Share Transfers / Investors Grievance Committee meetings held during the year 200607 and attendance details: of Date of Meeting 19.07.2006 30.08.2006 31.10.2006 22.12.2006 17.01.2006 24.01.2007 26.02.2007 Committee Strength Stren ength 3 3 3 3 3 3 3 Members presen esent present 3 3 2 2 2 3 3
ii.
42
iii. The Committee reviews the performance of the Companys Registrar and Transfer Agent (R&TA), and their system of dealing with and responding to correspondence from all categories of shareholders. The manner and timeliness of dealing with complaint letters received from Stock Exchanges/SEBI/ Dept. of Company Affairs etc., and the responses thereto, are reviewed by this Committee. During the year, 33 complaints were received from investors on matters relating to refund orders, revalidation of dividend warrants etc. and all were dealt with satisfactorily. There were no complaints forwarded by SEBI/ stock exchanges which were pending. Similarly, there are no valid requests pending for transfer of shares as at the year end. VI. A Compensation Committee has been constituted to deal with the issue of ESOPs. However, there was no occasion during the year for the Committee to meet. Gener Body Meetin eral eetings VII. General Body Meetings The details of the last three Annual General Meetings held are furnished as under: Financial anci end Financial year ended March 31, 2004 March 31, 2005 March 31, 2006 Date 29.09.2004 30.06.2005 29.09.2006 Time 3.30 p.m. 3.30 p.m. 3.30 p.m. enue Venue Registered Office Registered Office Sri KLN Prasad Auditorium, Federation of AP Chamber of Commerce & Industry, Red Hills, Hyderabad
All the resolutions placed before the shareholders at the above meetings were approved. There were no resolutions requiring approval through postal ballot. VIII.Disclosur Disclosures VIII.Disclosures i. There have been no materially significant related party transactions with the Companys promoters, Directors, the management, their subsidiaries or relatives which may have potential conflict with the interests of the Company. The necessary disclosures regarding the transactions with related parties are given in the Notes to the Annual Accounts for the year 2006-07. There have been no instances of non-compliance by the Company on any matters related to the capital markets, nor have any penalty / strictures beeen imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.
ii.
iii. The Company has fulfilled the following non-mandatory requirements as prescribed in Annexure I D to Clause 49 of the Listing Agreement with the Stock Exchanges. iv. M/s. Savita Jyoti Associates, Company Secretaries have carried out a secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The secretarial audit report confirms that the total issued / paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.
Mean of Communication eans unicati IX. Means of Communication The quarterly, half-yearly and annual results of the Company are published in leading newspapers in India which include, the Economic Times, the Business Standard, the Financial Express, Eenadu and Andhra Prabha. The results are also displayed on the Companys website www.prithvisolutions.com. The Companys website also displays official press/news releases, presentations made to analysts, and several other details/information of interest to stakeholders. The required disclosures to the extent applicable are also posted on the SEBI's EDIFAR website www.sebiedifar.nic.in
43
X.
Name, designation and address of Compliance Officer
Mr. A. N. Sarma, Head Legal & Company Secretary 10Q3, A1, 10th Floor, Cyber Towers HITEC City, Madhapur, Hyderabad 500 081 Ph. +91 40 6684 6019 ; Fax +91 40 6684 6021 Email: sarmaan@prithvisolutions.com ir@prithvisolutions.com
Contact for grievan evances Contact for investor grievances Shareholders Information ehold ormati XI. Shareholders Information a.
ehold eeting Date, time and Ven of Shareholders Meetin enue Date, time and Venue of Shareholders Meeting Day & Date Time Venue Saturday, September 29, 2007 10.30 a.m. Sri KLN Prasad Auditorium, Federation of AP Chamber of Commerce & Industry, Red Hills, Hyderabad (Tentative Schedule) July 31, 2007 3rd or 4th week of October, 2007 3rd or 4th week of January, 2008 3rd or 4th week of April, 2008 20% interim dividend for the financial year 2006-07 was approved by the Board of Directors on April 18, 2007 and was paid on May 15, 2007. The final dividend of 10% recommended by the Board, if approved by the Members shall be paid / credited before October 29, 2007. September 24 to 29, 2007 (Both days inclusive) Equity Shares: Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers Dalal Street, Mumbai - 400 001 National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G Block Bandra - Kurla Complex, Bandra (East) Mumbai - 400 051 FCCB: The Singapore Stock Exchange
b.
Financial Calend for anci Financial Calendar for April, 2007 to arch March 31, 2008 First Quarterly Results Second Quarterly Results Third Quarterly Results Fourth Quarterly
c.
Dividend Payment aymen Dividend Payment
d. e.
Book Closure Date Listing on Stock Exchanges
f.
for the Issue Trustee for the FCCB Issue
The Bank of New York, London Branch One Canada Square, 48th Floor London E14 5AL, UK Paid to BSE, NSE and Singapore Stock Exchange as per the Listing Agreements
g.
Listing Listing Fee
44
h. i. j. k.
ISIN No. Stock Codes Code Reuters Code Bloomberg Code Bloomberg Code Registered Office Registered Office
Equity: INE700C01013 FCCB: XSO289045501 BSE: 235675 NSE: PRITHVI PRIS@IN PISL.BO 10Q3, A1, 10th Floor, Cyber Towers HITEC City, Madhapur, Hyderabad 500 081, India Tel: +91 40 6684 6019, Fax: +91 40 6684 6021 Website: www.prithvisolutions.com
arket Price XII. Market Price Data High, low and number of shares traded during each month in the last financial year on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited for the year 2006-07: Rs. Source: BSE & NSE websites Exchan chang National ation Exchan chang Month Bombay Stock Exchange National Stock Exchange Total of shares No. of shares trad aded traded 935,412 882,475 403,487 426,199 3,185,881 1,477,934 4,204,875 15,309,832 4,245,181 4,789,005 3,967,918 3,039,987 Total of shares No. of shares aded trad traded 1,194,703 1,089,313 484,274 619,415 162,034 2,385,840 5,979,699 16,481,859 6,122,165 6,893,510 5,475,390 3,527,452
April, 2006 May, 2006 June, 2006 July, 2006 August, 2006 September, 2006 October, 2006 November, 2006 December, 2006 January, 2007 February, 2007 March, 2007
High 460.00 503.45 400.00 323.40 348.45 344.90 373.90 402.50 389.50 399.25 369.80 320.00
Low 330.00 350.05 263.00 247.15 244.00 302.00 304.00 345.00 310.00 346.10 295.15 254.50
High 460.00 475.00 387.50 323.40 349.00 344.80 374.70 401.70 388.85 400.00 369.10 317.90
Low 335.10 338.00 260.00 247.00 247.00 302.00 303.30 345.00 310.00 347.00 298.00 254.15
share performance orman Chart A - Prithvi share performance on BSE
45
Chart B - Prithvi share performance on NSE
XIII.Registrar XIII. Registrar and Transfer Agent Name Karvy Computershare Pvt. Ltd Ad Address Unit: Prithvi Information Solutions Ltd., Plot No. 17 to 24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081 Phone: +91 40 2342 0815, Fax: +91 40 2342 0814 E-mail: ksreddy@karvy.com Contact Person: Mr. K.S. Reddy
XIV. Share Transfer System XIV. Share Transfer Transfer of shares in electronic form is done through the depositories with no involvement of the Company. As regards, transfer of shares held in physical form, the transfer documents can be lodged with Company's Transfer Agent at above mentioned address. Transfers of shares in physical form are normally processed within 10-12 days from the date of receipt if the documents are complete in all respects. The Share Transfer and Investors' Grievances Committee is empowered to approve transfers. eholdin Mar arch XV. Shareholding XV. Shareholding as on March 31, 2007 a. Distribution of shareholding eholdin Mar arch Distribution of shareholding as on March 31, 2007 Category (Rs.) Category (Rs.) 1 5001 10001 20001 30001 40001 50001 100001 5000 10000 20000 30000 40000 50000 100000 of Accoun ccounts No. of Accounts 24,622 827 483 145 81 58 110 107 26,433 of Accoun ccounts % of Accounts 93.14 3.13 1.83 0.55 0.31 0.22 0.42 0.40 100.00 Shares Total Shares 1,994,521 671,563 747,536 375,527 289,991 275,649 808,523 12,913,690 18,077,000 of Value % of Value 11.03 3.72 4.14 2.08 1.60 1.52 4.47 71.44 100.00
& Above Total
46
b.
Categori of shareholders ories ehold Mar arch Categories of shareholders as on March 31, 2007 Category Promoter Group Bodies Corporate Banks/FI/FII/MF/Trusts NRI/OCB/FFI Resident Individuals Total of shares No. of shares 5,450,201 4,014,132 763,236 2,080,878 5,768,553 18,077,000 ercentage centag Percentage 30.15 22.21 4.22 11.51 31.91 100.00
Dematerialization of shares and liquidity aterializati XVI. Dematerialization of shares and liquidity The Company's shares are compulsorily traded in dematerialized form and are available for trading on both the depositories in India viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Equity shares of the Company representing 91.42 per cent of the Company's share capital are dematerialized as on March 31, 2007. The Company's shares are regularly traded on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. ADR/GDR/Warrants arran XVII. ADR/GDR/Warrants etc In February 2007, the Company issued FCCBs amounting to US$ 50 million and these are due for conversion into equity shares on or before February 2012. The Company has not issued any ADR/GDRs. e-appointment of Directors seeking re-appointmen brief pro XVIII. A brief profile of Directors seeking re-appointment is given below:
Dr. S.P. Narang aran Dr. S.P. Narang Date of Birth Date of Appointment Qualifications January 1, 1943 September 29, 2006 PhD. in financial management stream Fellow Member of Institute of Company Secretaries of India Mr. Omka Bhon ongir Mr. Omkar Srinivas Bhongir April 3, 1968 September 29, 2006 Graduate from Birla Institute of Technology and Science (BITS), Pilani, Rajasthan
Expertise in Fellow Member of All India Institute of Management Association Specific functional area Graduate in Law Presently, he is a Professor of Management and Director of Jagannath International Management School, New Delhi. Before joining this self financing institution, he was a Professor of Management & Law. Earlier, he worked as the CEO of the Institute of Company Secretaries of India, New Delhi, for about 10 years. He has also been providing consultancy in the field of financial management, corporate restructuring and corporate laws for over 20 years. He is closely associated with the functioning of corporate sector, capital markets and several educational and research institutions of national/ international importance. He has been closely associated with various committees of the Department of Company Affairs, Government of India and SEBI. Presently, he is a member of the Company Law Advisory Committee constituted by the Ministry of Company Affairs. He is also associated with the various Chambers of Commerce like FICCI, ASSOCHAM and CII. Directorships held in other public companies JCT Limited DSE Financial Services Limited
Presently working with Sybase USA as a Sr. Vice President. He has over 16 years of experience in the field of sales and strategy in software products and services of IT industry. Earlier, Mr. Omkar had worked in Tata Consultancy Services during the period 1990-1995.
47
Declaration by the Managing Director (CEO)

The Members of Prithvi Information Solutions Limited
I, V. Satish Kumar, Managing Director of Prithvi Information Solutions Limited declare that to the best of my knowledge and belief, all the Members of the Board and senior management personnel of the Company have affirmed their respective compliance with the applicable Code of Conduct for the year ended March 31, 2007.
Kum umar V. Satish Kumar Managing Director
Managing Director (CEO) and Chief Financial Officer (CFO) Certification

We, V. Satish Kumar, Managing Director and P.S. Shastry, Chief Financial Officer of Prithvi Information Solutions Limited to the best of our knowledge and belief, certify that: 1. We have reviewed the Balance Sheet and Profit and Loss Account and all its schedules and notes on accounts as well as the Cash Flow Statements for the year ended March 31, 2007. To the best of our knowledge and belief, (i) these statements do not contain any untrue statement or omit any material fact or contain statements that might be misleading; (ii) the financial statements and other financial information included in this report present a true and fair view of the Company's affairs and are in compliance with existing accounting standards and applicable laws and regulations. 3. To the best of our knowledge and belief, there are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company's code of conduct. We, are responsible for establishing and maintaining internal controls and procedures for financial reporting and we have: 5. a. evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any.
b.
2.
We have indicated to the Company's auditors and the Audit Committee of the Company's Board of Directors that during the year : (i) there are no significant changes in internal control over financial reporting ; (ii) there are no significant changes in accounting policies, and, (iii) there are no frauds, whether or not material that involves management or other employees who have significant role in the company's internal control system over financial reporting. Kum umar V. Satish Kumar Managing Director P.S. Shastry Chief Financial Officer
4.
Hyderabad, August 29, 2007
48
Auditors Report
The Members of Prithvi Information Solutions Limited 1. We have audited the attached Balance Sheet of M/s. Prithvi Information Solutions Limited as at March 31, 2007, and the related Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with the 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 our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; c. The Balance Sheet, Profit & Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts; In our opinion, the Balance Sheet, the Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Companies Act; On the basis of written representations received from the Directors, as on March 31, 2007 and taken on record by the Board of Directors, none of the Director is disqualified as on March 31, 2007 from being appointed as a director in terms of clause (g) of Sub-Section (1) of Section 274 of the Act; In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto, give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India; i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2007; In the case of the Profit & Loss Account, of the profit for the year ended on that date; and
d.
2.
e.
f.
3.
ii.
4.
iii. In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Patwari For Patwari & Co. Chartered Accountants
b.
Patwari Vijay Patwari Proprietor Membership No. 201653
49
Annexure to the Auditors Report

[Referred to in paragraph 3 of the Auditors Report of even date to the members of Prithvi Information Solutions Limited on the financial statements for the year ended March 31, 2007] 1. a. The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. 4. b. The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year. Company has not granted/taken any Loans,secured or unsecured to/from Companies,firms or other parties listed in the Register maintained under Section 301 of the Act, paragraph (iii)(b), (iii)(c), (iii)(d), (iii)(f), and (iii)(g) of the paragraph 4 of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the Company. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventories, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control system. a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance of Section 301 of the Act, have been so entered. In our opinion and according to the information and explanations given to us, the transaction made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
c.
5.
2.
The inventory has been physically verified by the management during the year/at the year end according to a phased programme normally so designed that each material item is physically verified at least once in a year and more often in appropriate cases. In our opinion, the frequency of verification is reasonable. a. In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. 6.
b.
b.
The Company has not accepted any deposits from the public within the meaning of Section 58A and Section 58AA of the Act and the rules framed there under. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. a. According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company
7.
3.
The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act. As the
8.
50
is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise Duty, Customs Duty, and other material statutory dues as applicable with the appropriate authorities. b. According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.
15. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. 16. 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 during the year. 17. The Company has not raised any debentures during the year. 18. The Company has not raised any money by public issues during the year. 19. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or, by the Company, noticed or reported during the year, nor have we been informed of such case by the management. 20. The other clauses (viii), (xiii) and (xix) of paragraph 4 of the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable in the case of the Company for the current year, since in our opinion there is no matter which arises to be reported upon under the aforesaid order. Patwari For Patwari & Co. Chartered Accountants
9.
The Company has no accumulated losses as at March 31, 2007 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.
10. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date. 11. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 12. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. 13. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company, for laons taken by others from banks or financial institutions during the year are not prejudicial to the interest of the Company . 14. The Company has not obtained any term loans.
Patwari Vijay Patwari Proprietor Membership No. 201653
51
Balance Sheet as at March 31, 2007

Rs. Millions Schedule I. SOURCES OF FUNDS SHAREHOLDERS FUNDS Share Capital Reserves & Surplus LOAN FUNDS Secured Loans Total APPLICATION CATI II. APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work-in-Progress INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES Sundry Debtors Cash & Bank Balances Other Current Assets, Loans and Advances Unbilled Revenue Total Current Assets LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions Total Current Liabilities & Provisions NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (To the extent not written off) Total
Significant Accounting Policies and Notes to Accounts
As at arch March 31, 2007
As at March 31, 2006
A B C
180.77 3,593.29 2,866.47 6640.53
180.77 2,750.22 204.09 3,135.08
356.87 87.75 269.12 7.99 277.11 535.07 2,442.11 2,418.11 655.59 444.91 5,960.72
322.45 32.77 289.68 289.68 221.21 2,068.36 504.12 357.52 102.01 3,032.01 353.92 53.90 213.00 5,747.72 80.63 6,640.53 407.82 2,624.19 3,135.08
E F G H
I J
143.52 69.48
The schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our report of even date For Patwari & Co. Chartered Accountants Patwari Vijay Patwari
Proprietor
For and on behalf of the Board of Directors
P.S. Shastry
Chief Finance Officer
A.N. Sarma
Company Secretary
Kum umar V. Satish Kumar

Managing Director
Prasad S. Lalith Prasad

Director
Membership No. 201653 Hyderabad August 29, 2007
52
Profit & Loss Account for the year ended March 31, 2007
Rs. Millions Schedule A. INCOME INCOME From Operations Export Domestic Other Income/(Loss) L Total EXPENDITURE Software Development Expenses M Telecom Material Administration, General & Other Expenses N Financial Expenses O Depreciation D Total Pro Befor Tax ore Profit Before Tax Provision for Income Tax Provision for Fringe Benefit Tax Profit After Current Year Taxes Previous Years Income Tax provison Previous Years Fringe Benefit Tax provision Pro Tax Profit After Tax Add : Balance brought forward from Previous Year Profit available for Appropriation Appropriation opriations Appropriations Transfer to General Reserve Interim Dividend and Proposed Final Divdend Corporate Dividend Tax on Interim Dividend and Proposed Final Dividend Corporate Dividend Tax for Previous Year Balance carried to Balance Sheet Total Earning Per Share Earning Per Share Basic [Face value of Rs.10 per share (Previous Year Rs.10 per Share)] Rs. Diluted [Face value of Rs.10 per share (Previous Year Rs.10 per Share)] Rs. Significant Accounting Policies and Notes to Accounts P end Year ended arch March 31, 2007 Year ended March 31, 2006
7,589.77 101.30 (67.11) (67.11) 7,623.96 5,457.35 77.43 1,080.71 41.46 54.97 6,711.92 912.04 6.49 0.60 904.95 (1.53) (1.53) 0.03 906.45 1,423.81 2,330.26 233.03 54.23 9.15 2,033.85 2,330.26
4,523.93 3.32 33.44 4,560.69 3,290.51 700.44 14.20 19.75 4,024.90 535.79 2.14 0.22 533.43 533.43 941.92 1,475.35 45.20 6.34 1,423.81 1,475.35
B.
50.14 48.98
37.77 37.77
The schedules referred to above form an integral part of the Profit & Loss Account. This is the Profit & Loss Account referred to is our report of even date For Patwari & Co. Chartered Accountants Vijay Patwari Patwari
Proprietor
P.S. Shastry
A.N. Sarma
Company Secretary
V. Satish Kumar Kum umar

Managing Director
S. Lalith Prasad Prasad

Director
53
Cash Flow Statement for the year ended March 31, 2007
Rs. Millions end Year ended arch March 31, 2007 Cash Flow from Operating Activities Cash from Operatin Activiti ating ctivities Pro efor ore Profit Before Tax Adjustments for Interest Income Income from Current Quoted Investments Depreciation Financial Expenses Changes in Current Assets and Liabilities Unbilled revenue Sundry Debtors Loans and Advances Current Liabilities Provisions Gener erated Operatin Activiti ating ctivities Net Cash Generated by Operating Activities from Financing Activiti ancin ctivities Cash Flow from Financing Activities Share Capital and Premium Secured Loan Financial Expenses Financing Activiti ancin ctivities Net Cash used in Financing Activities Cash Flow from Investing Activities from Investing Activiti ctivities Fixed Assets and Advances Investments Interest Income Income from Current Quoted Investments Miscellaneous Expenditure Investing Activiti ctivities Net Cash used in Investing Activities Incr crease and equivalents durin the uring Net Increase in Cash and Cash equivalents during the year EQUIVALENT AT ALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR EQUIVALENT AT ALENTS CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR Note: Figures in brackets indicate cash outflow This is the Cash Flow Satetement referred to in our Report of even date For Patwari & Co. Chartered Accountants Vijay Patwari
Proprietor
Year ended March 31, 2006 535.79 (1.39) 19.75 14.20 (17.08) (1,096.84) (85.87) 322.13 (0.08) (309.39) 1,488.50 204.08 (14.20) 1,678.38 (563.96) (221.21) 1.39 (86.54) (870.32) (498.67) 5.45 504.12
912.03 (9.81) (9.81) (13.40) (13.40) 54.97 41.46 (342.88) (342.88) (373.74) (373.74) (224.01) (224.01) (210.40) (210.40) (53.39) (53.39) (219.17) (219.17) 2,662.37 (41.46) (41.46) 2,620.91 (116.47) (116.47) (313.86) (313.86) 9.81 13.40 (80.63) (80.63) (487.75) (487.75) 1,913.99 504.12 2,418.11
P.S. Shastry
A.N. Sarma
Company Secretary

Managing Director
S. Lalith Prasad
Director
54
Schedules
Rs. Millions As at arch March 31, 2007 A. SHARE CAPITAL SHARE CAPITAL uthorised Authorised Capital 30,000,000 (Previous year 20,000,000) Equity Shares of Rs.10 each ssued, Pai aid-up Issued, Subscribed & Paid-up Capital 18,077,000 (Previous year 18,077,000) Equity Shares of Rs.10 each fully paid up Total B. RESERVES & SURPLUS Share Premium Opening Balance Add: Received Less: Public Issue Expenses Written Off Closing Balance General Reserve Profit & Loss Account Total C. LOANS SECURED LOANS ypothecati Loans from ecation Hypothecation Loans from Banks (Secured against Assets purchased) orking Loans Working Capital Loans Rupee Loans (Secured against First Charge on Fixed Assets and Current Assets) Foreign Currency Loans (Secured against First Charge on Fixed Assets and Current Assets) Forei Curren eign ency Bonds Foreign Currency Convertible Bonds (US$ 50,000,000) (Secured against Second Charge on all consolidated Receivables) Total 2,155.00 2,866.47 204.09 606.50 706.50 199.84 199.84 100.00 4.97 4.25 1,326.41 1,326.41 233.03 2,033.85 3,593.29 0.45 1,412.50 86.54 1,326.41 1423.81 2,750.22 180.77 180.77 180.77 180.77 300.00 200.00 As at March 31, 2006
55
56 Annual Report 2006-07
D. FIXED ASSETS Particulars As at March 31, 2006 Furniture & Fixtures Computers & other assets Vehicles Plant & Machinery Total Previous Year 3.71 308.00 6.22 4.52 322.45 24.81 GROSS BLOCK Additions during the year 0.28 31.87 2.27 34.41 297.64 As at arch March 31, 2007 3.99 339.87 8.49 4.52 356.86 322.45 Up to March 31, 2006 0.88 31.30 0.54 0.05 32.77 13.02 DEPRECIATI TION DEPRECIATION For the Year 0.25 53.74 0.77 0.21 54.97 19.75 Up to arch March 31, 2007 1.13 85.04 1.31 0.26 87.75 32.77 As at arch March 31, 2007 2.86 254.83 7.18 4.26 269.12 289.68
Rs. Millions NET BLOCK As at March 31, 2006 2.83 276.69 5.68 4.47 289.68
Rs. Millions As at arch March 31, 2007 E. INVESTMENTS INVESTMENTS Long Term Long Term nquoted Investments-Others ents-Oth Unquoted Investments-Others Opulent Venture Capital Trust A/c Chetana Fund, 125,000 Units (Previous Year - Nil) of Rs 1,000 each fully paid up Opulent Venture Capital Trust A/c Nirvana Fund, 25,000 Units (Previous Year - Nil) of Rs 1000 each fully paid up. Total nquoted Investmen ents Join Ventures) Trade oint entur Unquoted Investments (in Joint Ventures) - Trade Prithvi Qatar WLL, 98 Shares of Qatari Riyals 1,000 each (Previous Year - Nil) nquoted Investmen ent Subsidiaries) Trade diari Unquoted Investment (in Subsidiaries) - Trade Walking Stick Solutions P Ltd (Formerly known as Swing Technologies India P Ltd ) 3,371,550 Shares of Rs.10 each (Previous Year - Nil) fully paid up Curren Investmen ent ents Current Investments Quoted Investmen ents Others Quoted Investments - Others UTI Fixed Maturity Plan QFMP/0207/II 20,622,725.505 Units @ Rs.10 each Reliance Fixed horizon Fund II Quarterly Plan Series VI 11,000,000 Units @ Rs. 10.0173 each (Previous Year JM High Liquidity Fund 37145.65 Units @ Rs. 10.4302 each Kotak Liquidity (Regular) 1,450,852.3758 Units @ Rs. 13.8954 each P32D Prudential ICICI Luquid plan 12,699,036.61 Units @ Rs. 11.8514 each HDFC Cash Management Fund-Savings Plan 4,716,020.941 Units @ Rs. 10.6364 each) Total AGGREG GGREGA VALUES INVESTMENT AGGREGATE VALUES OF Book Value Market Value Book Value Market Value Quoted Investments Unquoted Investments 316.42 218.65 316.42 218.65 221.21 221.21 535.07 50.16 221.21 221.21 150.50 20.16 0.39 110.19 316.42 206.23 67.43 1.22 25.00 150.00 125.00 As at March 31, 2006
57
Rs. Millions As at arch March 31, 2007 F. DEBT SUNDRY DEBTORS (Unsecured) (Considered Good) Below 6 Months Sundry Debtors Others Sundry Debtors Total G. Domestic Overseas Domestic Overseas 88.25 2318.83 0.11 34.92 2,442.11 0.44 2,015.00 52.92 2,068.36 As at March 31, 2006
BANK BALANCES CASH & BANK BALANCES Cash Balance Cash in Hand Bank Balances Balance with Scheduled Banks-Domestic Current Accounts Call Money Deposits Fixed Deposits (including margin money) Balance with Scheduled Banks-Overseas Current Accouns Call Money Deposits Fixed Deposits (including margin money) Balance with other Banks-Domestic Current Accounts Balance with other Banks-Overses Current Accounts Total ASSETS, LOANS ADVANCES OTHER CURRENT ASSETS, LOANS AND ADVANCES (Unsecured,Considered Good ) (Receivable in Cash or in kind or value to be received) Deposits Loans Loans to Joint Venture Advance to Employees Advance for Expenses Advance to Others Advance Tax and TDS Total
0.10
3.15
132.38 144.81
69.74 430.44
2,080.72
60.10 2,418.11
0.79 504.12
H.
12.06 23.73 5.14 14.69 202.63 342,98 54.36 655.59
12.34 11.32 4.07 7.93 268.91 52.95 357.52
Advance-tax includes an amount of Rs.51.24 paid for disputed income Tax.
58
Rs. Millions As at arch March 31, 2007 I. CURRENT LIABILITIES Creditors for Capital Goods Creditors for Expenses Creditors for Purchases Interest accrued but not due on loans Unpaid Dividend TDS Payable Total J. PROVISI SIONS PROVISIONS Interim Dividend and Proposed Final Dividend Income Tax Fringe Benefit Tax Corporate Dividend Tax on Interim Dividend and Proposed Final Dividend Gratuity Total K. MISCELLANEOUS EXPENDITURE FCCB Issue / (Previous Year Public Issue) Expenses Less: Income from Public Issue Funds Balance Transferred to Share Premium Account Total 80.63 80.63 end Year ended March 31, 2007 L. OTHER INCOME Interest Income (TDS Rs.2.04) Income from Current Quoted Investments Gain/(Loss) on Exchange Fluctuations Total 9.81 13.40 (90.32) (90.32) (67.11) (67.11) 1.39 32.05 33.44 103.81 17.27 86.54 Year ended March 31, 2006 9.15 2.42 69.48 6.34 53.90 54.23 3.08 0.60 45.20 2.14 0.22 0.33 56.47 80.53 1.21 0.09 4.89 143.52 0.70 350.65 0.16 2.41 353.92 As at March 31, 2006
59
Rs. Millions end Year ended arch March 31, 2007 SOFTWARE M. SOFTWARE DEVELOPMENT EXPENSES Software Development Salaries & Benefits Software Development Expenses Total N. ADMINISTRA STRATIVE, OTHER ADMINISTRATIVE, GENERAL AND OTHER EXPENSES Administration & Marketing Staff Salaries& Benefits Staff Welfare Contribution to Provident Fund and Provision for Gratuity Directors Remuneration Communication Expenses Marketing Expenses Miscellaneous Expenses Operating Expenses Electricity Charges Rent Insurance Rates and Taxes Travelling Expenses Telecom Busniess Expenses Legal and Professional Fees Repair and Maintenance Auditors Remuneration Audit Fees Other services Total O. FINANCIAL EXPENSES Bank Charges Depository Expenses Interest Premium on Credit Insurance Trustee Fees Total 11.98 0.12 24.27 4.41 0.68 41.46 2.77 6.13 5.30 14.20 0.43 0.11 1,080.71 0.43 0.08 700.44 297.45 47.79 2.88 20.44 22.86 439.05 0.31 32.10 2.07 26.30 17.68 4.57 119.14 7.37 39.61 0.55 212.40 5.14 0.09 17.64 31.04 213.96 0.06 45.61 1.28 24.03 26.92 1.12 84.98 0.48 33.55 1.63 5155.75 301.60 5,457.35 3285.74 4.77 3,290.51 Year ended March 31, 2006
60
Significant Accounting Policies and Notes on Accounts

A. Significant Accounting Policies gnifican ccountin olici Significant Accounting Policies 1. ents eparati anci of Preparation Financial Statemen Basis of Preparation of Financial Statements i. The Financial Statements have been prepared to comply with all material aspects with the Mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company. The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. 4. Impairmen of Assets ent Impairment of Assets
Schedule P
The carrying amount of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised whereever the carrying amount of an asset exceeds it's recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. 5. Research Developmen ent Research & Development Research & Development expenditure is recognized in the Profit & Loss Account when incurred. 6. Leases Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased term,are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight line basis over lease term. 7. Investmen ents Investments Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual/ category wise (as appropriate) investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the long term investments. 8. Inventori tories Unbilled Revenue Inventories / Unbilled Revenue The Inventories are in the form of unbilled revenue. Unbilled revenue is the job completed, but not billed to the client. Unbilled revenue is valued at cost on the efforts incurred on Contracts. Sales comprises of incremental unbilled revenue.
ii.
2.
Fixed Assets Fixed Assets Fixed Assets are stated at cost less accumulated depreciation. All costs, directly attributable to bring the asset to the present condition for the intended use, are capitalized. Asset not capitalised during the year due to it's non completion is shown as capital-work-inprogress. Assets costing Rs. 5,000 or less is fully depreciated in the year of purchase.
3.
Depreciation eciati Depreciation Depreciation on Fixed Assets has been provided on the straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.Depreciation on the assets acquired during the year is provided on Prorata basis at the rates specified in Schedule XIV of the Companies Act, 1956.
61
Significant Accounting Policies and Notes on Accounts (Contd.)
9.
Revenue recogniti ecognition Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue From Services Revenue From Services Revenue from services consist of time and material contracts and fixed price contracts. In the case of time and materials contracts, revenues are recognised on the basis of time spent and duly approved by respective customers. In the case of fixed price contracts revenues are recognised based on percentage of completion method. The percentage of completion is determined based on individual contract. Revenue from of Revenue from Sale of Goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed on to the buyer. Revenue from operations excludes taxes on sale. Others Others Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Income from mutual funds is recognized on the basis of increase in net asset value of the funds and dividend declared.
Exchan differen chang ences Exchange differences Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise except those arising from investments in non-integral operations. Exchange differences arising in respect of fixed assets acquired from outside India are capitalised as a part of fixed asset. Exchange differences on liability relating to fixed assets acquired within India arising out of transactions entered on or before March 31, 2004 are added to the cost of such assets in line with old AS 11 (1994). Forward exchange contracts not intended for trading or speculation purposes. The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. anslatin of Integr Forei Operati slating tegral eign ation Translating of Integral Foreign Operation The financial statements of an integral foreign operation are translated as if the transaction of the foreign operation have been those of the company itself. Retirement Benefit emen 11. Employee Retirement Benefit A retirement benefit in the form of Provident Fund is a defined contribution scheme and contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. Gratuity liability is defined benefit obligations and is provided for on the basis of an actuarial valuation made at the end of each financial year.
eign ency saction Forei Curren Transactions 10. Foreign Currency Transactions Initial Recognition Foreign currency transactions are recorded in reporting currency, by applying to foreign currency amount the exchange rate between the reporting currency and foreign currency at the beginning of the month. Conversion Conversion Foreign currency monetary items are reported using the monthly closing rate. Non-monetary items which are carried at fair value or other similar valuation denominated in foreign currency are reported using the exchange rate that existed when the values were denominated.
62
Provisi for Curren and Deferred Tax ovision ent 12. Provision for Current and Deferred Tax Tax expense comprises of current and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred income tax is not provided for, as the Company is claiming income-tax exemption on profits derived from the export of software under Section 10 A of Income-Tax Act. 13. Segment Reporting The business of the Company falls major within a single primary business begment "Software Development" and hence the disclosure required under Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable. Earning Per Share 14. Earning Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings
per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. 15. Provision, Contingent Liabilities and Contin ent Assets ting Contingent Assets A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Provisions involving substantial degree of estimation in measurement are recognised when there is a result of past events. Contingent liabilities are not recognised but are disclosed in the notes on accounts. Contingent Assets are neither recognised nor disclosed in the Financial Statement. 16. Cash, Cash Equivalents and Cash Flows a. Cash and cash equivalents in the Cash Flow Statement comprise of cash in hand and bank balance and deposits. b. The Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard 3 (AS 3) on Cash Flow Statement issued by the Institute of Chartered Accountants of India.
63
B.
on Notes on Accounts 1. Earnings per Share (EPS) Particulars Net Profit After Tax as per Profit and Loss Account attributable to Equity Shareholders Weighted Average Number of Equity Shares Basic (Nos. Millions) Weighted Average Number of Dilutive Equity Shares due to Foreign Currency Convertible Bonds (Nos. in Millions) Total shares outstanding (including dilution) Nominal Value per Equity Share(Rs.) Basic Earnings Per Share (Rs.) Dilutive Earnings Per Share (Rs.) 2. Auditors Remuneration Particulars Audit Fees Taxation Matters Certification Fees Total anagerial Remunerati ageri uneration Managerial Remuneration Remuneration paid to Managing Director and Wholetime Directors during the year is Rs.19.54 (Previous Year : Rs.17.64) Particulars Managing Director anagin Managing Director Salary & Perquisites-V. Satish Kumar Wholetim Directors oletime Wholetime Directors Salary & Perquisites - V. Madhavi Salary & Perquisites - G. Srikanth Reddy Total 2006-07 6.00 8.12 5.42 19.54 2005-06 5.20 7.99 4.45 17.64 2006-07 906.45 18.07 0.43 18.50 10.00 50.14 48.98 Rs. Millions 2005-06 533.43 14.12 14.12 10.00 37.77 37.77
2006-07 0.43 0.11 0.54
2005-06 0.43 0.05 0.03 0.51
3.
Necessary approvals from the Central Government for the appointment and payment of remuneration to Ms. V. Madhavi and Mr. G. Srikanth Reddy have been obtained since they are Non Resident Indians. No Computation of profits under Section 349 of the Companies Act, 1956 has been given since no commission is paid to Directors. 4. Gratuity and other Retirement Benefit Plans emen Gratuity and other Retirement Benefit Plans The Company has a defined benefit gratuity scheme. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days basic salary (last drawn basic salary) for each completed year of service. The scheme is unfunded and the company has provided gratuity for the total outstanding in the current year. 5. Deferred Tax Liability Deferred Tax Liability Deferred income tax is not provided for, as the company is claiming Income Tax exemption on profits derived from the export of software under Section 10A of the Income Tax. 6. Secured Loans/Working s/Workin Loans Secured Loans/Working Capital Loans Assets acquired on hypothecation are secured against the same. Working capital loans availed from banks are secured by first charge on both entire current assets and fixed assets of the Company on pari passu basis with each participating banks.
64
7.
Foreign Currency Convertible Bonds (FCCB)
Rs. Millions
The Company has issued Zero Coupon Foreign Currency Convertible Bonds U.S.$50.00 Million due in 2012, which are convertible into ordinary shares of the Company. The Bonds are issued in the denomination of US$ 0.1 Million each and in integral multiples thereof. The Bonds will constitute direct, unconditional and secured obligations of the Company and will rank pari passu, without any preference among themselves, with all other outstanding secured and unsubordinated obligations of the Company. But in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights. The Bonds will be secured by a second charge on all consolidated receivables. The Bond will have Yield to Maturity @ 8.58 per cent per annum compounded semi-annually. 8. Contingent Liabilities The following are the contingent liabilities: Particulars Income Tax for the FY 2000-01 Employees Provident Fund Bank Guarantee Bond executed with customs for duty free import of goods Interest on Foreign Currency Convertible Bonds a. Income Tax for the FY 2000-01 Incom Tax for the come Income Tax Demand for Rs.43.32 contested by the company before the Income Tax Appellate Tribunal. The case is still pending as on March 31, 2007. However an amount of Rs.51.23 (including interest till the date of payment) has been collected by the department, pending disposal of the appeal. The Company will be refunded this amount once the appeal is decided in favour of the Company. b. Employees Provident Fund The Assistant Provident Fund Commissioner has passed an order on July 1, 2005 against the Company for payment of total sum of Rs.0.52 for the period from October,2002 to February, 2005. The Company has filed an application for review on August 11, 2005, under Section 7B(1)(1) of The Employees Provident Funds and Miscellaneous Provisions Act,1952 and also deposited 50% of the demand without prejudice to its rights. The appeal is pending. 9. Financial and anci Instruments strumen Financial and Derivative Instruments Nominal amounts of Options Contracts entered into by the Company and outstanding as on March 31, 2007 is Rs.64.65 All derivative and financial instruments acquired by the Company are for hedging purposes only. The Foreign Currency Transactions that are not hedged by derivative and financial instruments as on March 31, 2007 are as under: a. Receivables b. Payables c. Investments in Joint Ventures d. Foreign Currency Convertible Bonds (FCCB) e. Deposits with Banks (FCCB Proceeds) a. b. c. d. Rs. 2,289.10 Rs. Rs. 51.91 1.23 2006-07 51.23 0.52 34.35 2.66 14.57 2005-06 51.23 0.52 29.55 0.42
Rs. 2,155.00 Rs. 2,080.72
The receivables are unhedged as majority of the receivables are spent in foreign currency only and to that extent natural hedge exists. Similarly, the payables are unhedged as it would be paid out of receivables of the same currency. The investments in joint ventures are unhedged as it is a long term investment. The proceeds of FCCB is kept as deposit with bank in the same foreign currency as FFCB. Thus, it is unhedged.
65
10. Loans and Advances in the nature of Loans given to Subsidiaries and Associates
Rs. Millions
An amount equivalent to Rs. 5.14 (Previous Year: Nil) given to Prithvi Qatar WLL, a Joint Venture Company in the State of Qatar. Loans and Advances to Joint Venture Company fall under the category of Loans and Advances in the nature of Loans, where there is no Repayment Schedule drawn and it is repayable on demand. Prithvi Qatar WLL has no investments in the Company. and Unbilled Revenue 11. Sales and Unbilled Revenue Sales comprises of incremental unbilled revenue of Rs.342.89 (Previous Year - Rs.17.08). 12. Report on related parties As per Accounting Standard 18 on "Related Party Disclosure", issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below. The followings are the related parties with whom transactions have taken place. Name of the concern Vuppala Magnetic Components Pvt. Ltd. Prithvi Information Solutions International LLC. Prithvi Qatar WLL. Walking Stick Solutions P Ltd. The transactions with the related parties are summarized below: Nature of Transaction Transactions 2006-07 Vuppala gneti Componen etic ents Vuppala Magnetic Components Pvt Ltd Purchase of Fixed Assets Reimbursement of Expenses/receivable Technology Partner for Telecom Business/Receivable Purchase of goods/payable Guarantees given nformation Solution ormati ons ternational ation Prithvi Information Solutions International LLC Sale/receivable Reimbursement of Expenses/receivable Prithvi Qatar WLL Capital Loan advanced alking Stick Solution ons Limited Walking Stick Solutions Pvt. Limited Purchase of shares / Share Application Money 49.63 17.80 17.80 1.23 5.14 5.14 43.08 21.25 18.97 21.25 30.69 80.53 35.00 22.60 53.29 80.53 35.00 22.60 0.87 25.50 1.14 2.01 1.14 2005-06 Balances 2006-07 2005-06 Relationship Other Key Managerial personnel Joint Venture Subsidiary
66
Significant Accounting Policies and Notes on Accounts (Contd.)

13. Quantitative Details Rs. Millions
The Company is engaged in the development and maintenance of software, the production and sales of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and other information as required under the paragraphs 3, 4C and 4D of Part-II of Schedule VI to the companies Act, 1956 for software development. During the year Company has dealt with telecommunication hardware and information required under the paragraphs 3, 4C and 4D of Part-II of Schedule VI to the Companies Act, 1956 are as under: Particulars Quantity Million Nos os. Million Nos. Opening Stock Purchases Sales Closing Stock 0.02 0.02 77.43 93.80 2006-07 Value Quantity Million Nos. 2005-06 Value
Forei Curren eign ency Bonds Issue Expenses 14. Foreign Currency Convertible Bonds (FCCB) Issue Expenses FCCB issue expenses of Rs.80.63 has been carried forwarded to be written off against premium to be received on issue of shares against FCCB amount. eign chang Forei Exchan Earnings Outgo 15. Foreign Exchange Earnings & Outgo Particulars Export Sales Foreign Traveling Onsite - Software development & other expenditure of utilisation of amoun raised through Public Issue ounts 16. Details of utilisation of amounts raised through Public Issue Particulars Buildings Interiors Computers & software tools Working Capital Issue Expenses Total Amount envisaged 600.00 120.00 190.00 490.00 100.00 1500.00 Amount Revised 300.00 120.00 490.00 340.00 100.00 1350.00 Spent up to 31.03.2007 181.40 329.50 203.00 101.20 815.10 2006-07 7,250.49 1.88 6,416.67 2005-06 4,506.85 1.06 3,925.37
Revision in working capital amount envisaged is due to reduction in public issue amount from Rs.1500 Millions to Rs.1350 Millions. 17. Consolidation As per Accounting Standard 21 on Consolidated Financial Statements and Accounting Standard 23 on Accounting for Investment in Associates in Consolidated Financial Statement issued by the Institute of Chartered Accountants of India, the Company has presented consolidated Financial Statement, including subsidiaries. The Consolidated business of the Company falls within a single primary business segment "Software Development" and hence the disclosure required under Accounting Standard (AS-17) "Segment Reporting" issued by the institute of Chartered Accountants of India is not applicable.
67
Previous 18. Previous year's figures The previous year's figures have been reworked, regrouped, rearranged and reclassified whereever necessary. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year. As per our Report of even date For Patwari & Co. Chartered Accountants Patwari Vijay Patwari
Proprietor
P.S. Shastry
A.N. Sarma
Company Secretary

Managing Director

Director
Membership No. 201653 Hyderabad, August 29, 2007
Balance Sheet Abstract

INFORMATI TION PURSUANT TO PART TO COMPANIES ACT CT,1956 (As amen end INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT,1956 (As amended) alan Sheet Abstract and Company's Gener Business Pro ance eral Balance Sheet Abstract and Company's General Business Profile I. gistrati ation Registration Details Registration Number L72200AP1998PLC029831 State Code 01 Balance Sheet Date March 31, 2007 raised durin the uring (Amoun ount Rs. thousan ousands) Capital raised during the year (Amount in Rs. thousands) Public Issue Rights Issue Bonus Issue Private Placement osition of mobilisati and deployment of funds (Amoun obilisation eploymen ount Rs. thousan ousands) Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities 6640526 Total Assets 6640526 Sources of Funds Sources of Funds Paid-up Capital 180770 Reseves & Surplus 3593288 Secured Loans 2866468 Unsecured Loans Application of Funds Applicati of Funds cation Net Fixed Assets 277111 Investments 535076 Net Current Assets 5747706 Miscellaneous expenditure 80633 erformance of Company (Amoun orman ount Rs. thousan ousands) Performance of Company (Amount in Rs. thousands) Turnover 7691081 Total Expenditure 6779043 Profit Before Tax 912038 Proft After Tax 906448 Earnings per share in Rs.(on par value of Rs.10 per share) 48.98 Dividend Rate 30% Generi nam of three prinicpal prod eric ames odu services of Company mon onetary terms) Generic names of three prinicpal products / services of Company (as per monetary terms) Item Code No.(ITC Code) 85249009.10 Product description Software Development
II.
III.
IV. IV.
V.
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Consolidated financial statements of Prithvi Information Solutions Limited and Subsidiaries
Auditors Report
The Board of Directors Prithvi Information Solutions Limited We have audited the attached Consolidated Balance Sheet of Prithvi Information Solutions Limited ['the Company'] and subsidiaries (collectively called 'the PRITHVI Group') as at March 31, 2007, and the Consolidated Profit and 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. We conducted our 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 our audit provides a reasonable basis for our opinion. We report that the Consolidated Financial Statements have been prepared by the Company's management in accordance with the requirements of Accounting Standard 21 (AS-21) "Consolidated Financial Statements" and Accounting Standard 23 (AS-23), "Accounting for Hyderabad August 29, 2007 Patwari Vijay Patwari Proprietor Membership No. 201653 c. The Consolidated Cash Flow Statement of the Prithvi Group for the year ended on that date is not presented this year being the first year of consolidated operations. For Patwari & Co. Chartered Accountants b. Investments in Associates" in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India. On the basis of information & explanations given to us, and on the consideration of the separate audit reports on individual audited financial statements of Prithvi Information Solutions Ltd, its subsidiaries, we are of the opinion: a. The Consolidated Balance Sheet gives a true & fair view of the state of affairs of the Prithvi Group as at March 31, 2007; The Consolidated Profit and Loss Account gives a true & fair view of the profit of the Prithvi Group for the year ended on that date; and,
69
Consolidated Balance Sheet as at March 31, 2007

Rs. Millions Schedule I. SOURCES OF FUNDS SHARE HOLDERS FUNDS Share Capital Reserves & Surplus LOAN LOAN FUNDS Secured Loans Minority Interest Total APPLICATIONS CATI II. APPLICATIONS OF FUNDS Goodwill FIXED ASSETS Gross Block Less: Depreciation Net Block Capital Work in Progress INVESTMENTS ASSETS, LOANS ADVANCES CURRENT ASSETS, LOANS & ADVANCES Sundry Debtors Cash & Bank Balances Other Current Assets, Loans and Advances Unbilled Revenue Total Current Assets Less:CURRENT LIABILITES & PROVISIONS PROVISI SIONS Current Liabilites Provisions Total Current Liabilites & Provisions NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (To the extent not written off) Total Significant Accounting Policies and Notes on Accounts The schedules referred above forms an integral part of the Balance Sheet. This is the Balance Sheet referred to in our report of even date For Patwari & Co. Chartered Accountants Patwari Vijay Patwari
Proprietor
As at arch March 31, 2007
A B C
180.77 3,566.77 2,866.47 16.02 6,630.03 7.73
E F G H
359.55 88.39 271.16 7.99 279.15 467.64 2,443.90 2,427.56 656.28 444.90 5,972.64
I J
147.17 69.86 217.03 5,755.61 119.90 6,630.03
P.S. Shastry
A.N. Sarma
Company Secretary

Managing Director

Director
70
Consolidated Profit & Loss Account for the year ended March 31, 2007
Rs. Millions Schedule A. INCOME INCOME From Operations Export Domestic Other Income/(Loss) L Total EXPENDITURE Software Development Expenses M Telecom Material Administration, General & Other Expenses N Financial Expenses O Miscellaneous Expenditure written Off K Depreciation D Total Pro Befor Tax ore Profit Before Tax Provision for Income Tax Provision for Fringe Benefit Tax Pro Curren Year Tax ent axes Profit After Current Year Taxes Previous Years Income Tax provison Previous Years Fringe Benefit Tax provision Pro Tax (Befor Minority Inter ore terest) Profit After Tax (Before Minority Interest) Minority Interest Add : Balance brought forward from Previous Year Profit available for Appropriations APPROPRIATI TIONS APPROPRIATIONS Transfer to General Reserve Interim Dividend and Proposed Final Divdend Corporate Dividend Tax on Interim Dividend and Proposed Final Dividend Corporate Dividend Tax for Previous Year Balance carried to Balance Sheet Total Earning Per Share Earning Per Share Basic [Face value of Rs.10 per share (Previous Year Rs.10 per Share)] Diluted [Face value of Rs.10 per share (Previous Year Rs.10 per Share)] Significant Accounting Policies and Notes to Accounts P End Year Ended arch March 31, 2007
7,672.91 101.31 (67.11) 7,707.11 5,471.14 77.43 1,188.37 41.48 55.60 6,834.02 873.09 6.78 0.68 865.63 (1.53) 0.03 867.13 (12.80) 1,423.81 2,303.74 233.03 54.23 9.16 2,007.32 2,303.74 48.68 47.55
B.
The schedules referred above forms an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our report of even date For Patwari & Co. Chartered Accountants Patwari Vijay Patwari
Proprietor
P.S. Shastry
A.N. Sarma
Company Secretary

Managing Director

Director
71
Consolidated Schedules forming Balance Sheet and Profit & Loss Account
Rs. Millions As at arch March 31, 2007 CAPITAL A. SHARE CAPITAL Authorised Capital 30,000,000 (Previous Year 20,000,000) equity shares of Rs.10 each Issued,Subscribed and Paid up Capital 18,077,000 (Previous Year 18,077,000) equity shares of Rs.10 each fully paid up Total B. RESERVES & SURPLUS Share Premium General Reserve Profit & Loss A/c Total C. LOANS SECURED LOANS From From Banks Hypothecation Loans-Secured against Assets purchased orking Loans Working Capital Loans Rupee Loans (Secured against First Charge on Fixed Assets and Current Assets) Foreign Currency Loans (Secured against First Charge on Fixed Assets and Current Assets) Foreign Currency Convertible Bonds (US$ 50,000,000) (Secured against Second Charge on all consolidated Receivables) Total 2,866.47 2,155.00 606.50 706.50 100.00 4.97 1,326.42 233.03 2,007.32 3,566.77 180.77 180.77 300.00
72
D. FIXED ASSETS Particulars As at March 31, 2006 Furniture & Fixtures Computers & Other Assets Vehicles Plant & Machinery Total
Annual Report 2006-07 73
Rs. Millions GROSS BLOCK Additions during the year 0.51 33.98 2.27 36.76 As at arch March 31, 2007 4.37 342.16 8.49 4.52 359.55 Up to March 31, 2006 0.88 31.31 0.54 0.5 32.78 DEPRECIATI TION DEPRECIATION For the Year 0.27 54.34 0.77 0.21 55.60 Up to arch March 31, 2007 1.15 85.65 1.31 0.26 88.39 NET BLOCK As at March 31, 2006 2.98 276.86 5.68 4.47 289.99 As at arch March 31, 2007 3.22 256.50 7.18 4.25 271.16
3.86 308.17 6.22 4.52 322.78
Rs. Millions As at arch March 31, 2007 E. INVESTMENTS INVESTMENT Long Term Long Term nquoted Investments-Others ents-Oth Unquoted Investments-Others Opulent Venture Capital Trust A/c Chetana Fund,125,000 Units (Previous Year - Nil) of Rs 1,000 each fully paid up Opulent Venture Capital Trust A/c Nirvana Fund,25,000 Units (Previous Year - Nil) of Rs 1000 each fully paid up Total nquoted Investmen ents Join Ventures) Trade oint entur Unquoted Investments (in Joint Ventures) - Trade Prithvi Qatar WLL, 98 Shares of Qatari Riyals 1,000 each (Previous Year - Nil) Curren Investmen ent ents Current Investments Quoted Investments-Others ents-Oth Quoted Investments-Others UTI Fixed Maturity Plan QFMP/0207/II 20,622,725.505 Units @ Rs.10 each Reliance Fixed horizon Fund II Quarterly Plan Series VI 11,000,000 Units @ Rs. 10.0173 each Total INVESTMENT AGGREGATE VALUES OF Book Value Quoted Investments Unquoted Investments F. DEBT (Unsecured) SUNDRY DEBTORS (Unsecured) (Consi ered sid (Considered Good) Months) onth (Below 6 Months) Sundry Debtors - Domestic - Overseas Others Sundry Debtors - Domestic - Overseas Total 0.11 34.92 2,443.90 88.25 2,320.62 316.42 151.22 Market Value 316.42 151.22 110.19 316.42 467.64 206.23 1.22 25.00 150.00 125.00
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Rs. Millions As at arch March 31, 2007 G. BANK BALANCES CASH & BANK BALANCES Cash Balance Cash in Hand Bank Balances Balance Sched eduled Banks-Domesti estic Balance with Scheduled Banks-Domestic Current Accounts Call Money Deposits Fixed Deposits (including margin money) Balance Sched eduled Balance with Scheduled Banks-Overseas Current Accounts Call Money Deposits Fixed Deposits (including margin money) Balance other Banks-Domesti estic Balance with other Banks-Domestic Current Accounts Balance with other Banks-Overseas Current Accounts Total H. ASSETS, LOANS ADVANCES OTHER CURRENT ASSETS, LOANS AND ADVANCES (Unsecured, Considered Good ) (Receivable in Cash or in kind or value to be received) Deposits Loans Loans to Joint Venture Advance to Employees Advance for Expenses Advance to Others Advance Tax and TDS Total Advance tax includes an amount of Rs.51.24 paid for disputed income tax CURRENT LIABILITIES Creditors for Capital Goods Creditors for Expenses Creditors for Purchases Interest accrued but not due on loans Unpaid Dividend TDS Payable Total 0.10
140.95 144.81
2,080.72
60.98 2,427.56
12.32 23.73 5.14 14.72 202.95 342.98 54.44 656.28
I.
0.34 60.03 80.53 1.21 0.09 4.97 147.17
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Rs. Millions As at arch March 31, 2007 J. PROVISI SIONS PROVISIONS Interim Dividend and Proposed Final Divdend Income Tax Fringe Benefit Tax Corporate Dividend Tax on Interim Dividend and Proposed Final Dividend Gratuity Total K. MISCELLANEOUS EXPENDITURE FCCB Issue /(Previous Year Public Issue) Expenses Preliminary Expenditure Opening Balance Add:Incurred during the year Less: Written Off during the year Closing Balance Total 0.34 38.93 39.27 119.90 End Year Ended March 31, 2007 L. OTHER INCOME Interest Income (TDS Rs.2.04) Income from Current Quoted Investments Gain/(Loss) on Exchange Fluctuations Total SOFTWARE M. SOFTWARE DEVELOPMENT EXPENSES Software Development Salaries & Benefits Software Development Expenses Total 9.81 13.40 (90.32) (67.11) 54.23 3.38 0.68 9.16 2.41 69.86
80.63
5,155.75 315.39 5,471.14
76
Rs. Millions End Year Ended March 31, 2007 N. ADMINISTRATION, STRATI OTHER ADMINISTRATION, GENERAL AND OTHER EXPENSES Administration & Marketing Staff Salaries & Benefits Staff Welfare Contribution to Provident Fund and Provision for Gratuity Directors Remuneration Communication Expenses Marketing Expenses Miscellaneous Expenses Operating Expenses Electricity Charges Rent Insurance Rates and Taxes Travelling Expenses Telecom Busniess Expenses Legal and Professional Fees Repair and Maintenance Auditors Remuneration Audit Fees Other services Total O. FINANCIAL EXPENSES Bank Charges Depository Expenses Interest Premium on Credit Insurance Trustee Fees Total 355.30 47.87 2.88 20.55 24.16 475.56 0.81 32.39 2.18 27.67 17.68 4.59 124.65 7.37 42.60 1.45 0.46 0.20 1,188.37
11.99 0.12 24.27 4.41 0.69 41.48
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Significant Accounting Policies and Notes on Accounts

A. Significant Accounting Policies gnifican ccountin olici Significant Accounting Policies 1. Principles of Consolidation
Schedule P
For preparation of these Consolidated Financial Statements, in keeping with Accounting Standard 21 (AS 21) on Consolidated Financial Statements and Accounting Standard 23 (AS 23) on Accounting for investments in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India: a. b. The financial statements of the holding company and its subsidiaries have been combined on line-byline basis by adding together like items of assets, liabilities, income and expenses. Regarding investments in subsidiary as the holding in subsidiary is less than 100%, minority interest in the net assets of consolidated subsidiary consist of: i. ii. The amount of equity attributable to minorities at the date on which investment in the subsidiary is made. The minorities share of movements in equity since the date of parent subsidiary relationship came into existence.
iii. Minority interest's share of net profit for the year of consolidated subsidiary is identified and adjusted against profit after tax of the group. c. Foreign subsidiary representing non integral foreign operations are translated for the purpose of consolidation in accordance with Accounting Standard 11 (AS 11) issued by the Institute of Chartered Accountants of India is as follows: i. ii. The assets and liabilities both monetary are translated at closing rate. Income and expenses items are translated at average rate for the period.
iii. All resulting exchange differences are accumulated in a foreign currency translation reserve until disposal of net investment. d. Uniform accounting policies for like transactions and other events in similar circumstances have been adopted and presented to the extent possible, in the same manner as the parent company's separate financial statements.
2.
Investmen ents Investments Investments other than investments in subsidiaries have been accounted as per Accounting Standard 13 (AS 13) issued by the Institute of Chartered Accountants of India on "Accounting for investments".
3.
Other Significant accounting policies: These are set out under "Significant Accounting Policies" as given in the non-consolidated financial statements of Prithvi Information Solutions Limited.
B.
Notes on Accounts 1. Consolidation In accordance with Accounting Standard 21 "Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India, the consolidated financial statements includes Walking Stick Solutions Private Limited and the financial statements of its wholly owned subsidiary Walking Stick Solutions Inc.
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2.
Subsidiaries The details of subsidiaries and sub-subsidiaries are as follows: Name of the subsidiary Subsidiary Walking Stick Solutions Pvt. Limited Sub-Subsidiary Walking Stick Solutions Inc. USA India Country of incorporation
Rs. Millions % Holding 67.44 100 2006-07 867.12 18.07 0.43 18.50 10.00 48.68 47.55 2006-07 0.46 0.20 0.66 2006-07 7266.79 3.30 6462.95
3.
4.
Earnings per Share (EPS) Particulars Net Profit after Tax as per Profit and Loss Account attributable to Equity Shareholders Weighted average number of Equity Shares Basic (Nos.) Weighted average number of dilutive Equity Shares due to Foreign Currency Convertible Bonds (Nos.) Total shares outstanding (including dilution) Nominal Value per Equity Share (Rs.) Basic Earnings Per Share (Rs.) Dilutive Earnings per Share (Rs.) Auditors Remuneration Particulars Audit Fees Certification Fees Total Foreign Exchange Earnings & Outgo Particulars Export Sales Foreign Traveling Onsite - Software development & other expenditure
5.
6.
Others Current liabilities include advance of Rs.0.04 which is due to a body corporate in which the directors of the subsidiary company Walking Stick Solutions Pvt. Limited are interested as directors. During the year, share issue expenses of Rs.0.33 and R&D expenditure of Rs.38.59 are amortized as preliminary expenses. The Consolidated Financial Statement is for the first year of operations. Previous year's figures are not presented as it is not comparable. Due to the same reason, cash flow is also not presented.
As per our Report of even date For Patwari & Co. Chartered Accountants Patwari Vijay Patwari
Proprietor
P.S. Shastry
A.N. Sarma
Company Secretary

Managing Director

Director
79
Walking Stick Solutions Private Limited
Auditors Report
The Members, Walking Stick Solutions Private Limited We have audited the attached Balance Sheet of M/s. Walking Stick Solutions Private Limited as at March 31, 2007 and Profit & Loss Account of the Company for the year ended on that date, annexed. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on the 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 over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purpose of our Audit. In our opinion, the Company as required by law has kept proper books of accounts so far as appears from an examination of the books. In our opinion, to the best of our information and according to the explanation given to us the said account give us information required by the Companies Act, 1956, in the manner so required and give a true and a fair view in conformity with the accounting principles generally accepted in India :a. b. In the case of Balance Sheet of the State of Affairs of the Company as at March 31, 2007 and, In the case of Profit & Loss Account of the Company of the Loss for the year ended as on that date. Howrah May 16, 2007 Kum Dokani umar ania Sushil Kumar Dokania Partner 4. In our opinion, the Profit & Loss Account and Balance Sheet comply with the Accounting Standard referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956. The Balance Sheet & Profit and Loss Account dealt with by this report are in agreement with the books of account. As verified from the records of Company none of its Directors are disqualified under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 from being appointed as the Directors of the company. However, in absence of confirmation from Directors with respect to the qualification specified in the said section, concerning other companies where the Directors of the Company are Directors, we are unable to comment on the same. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, of India (the Act), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we set out in the annexure a statement.
5. 6.
7.
2.
3.
For Dokania S. Kumar & Company Dokani ania Kum umar Company Chartered Accountants
Annexure to the Auditors Report

(Referred to in Paragraph 7 of the Auditorss Report of even date to the members of Walking Stick Solutions Private Limited on the financial statements for the year ended March 31, 2007) i. a. The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. The fixed assets are physically verified by the Management according to a phased programme designed to cover all items over a period of three financial years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. ii. c. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.
b.
The Company is a software development & services company, not maintain any inventory. Accordingly clause (ii) of paragraph 4 of the Order is not applicable to the Company for the current year. a. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii) (b) to (iii) (d) of paragraph 4 of the Order are not applicable to the Company for the current year. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties
iii.
b.
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covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii)(f) and (iii)(g) of the paragraph 4 of the Order are not applicable to the Company for the current year. iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, fixed assets and for the sale of software and services. Further, on the basis of our explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. a. In our opinion and according to the information and explanations give to us, the particulars of contracts or arrangements referred to in Section. 301 of the Act have been entered in the Register maintained under that Section. In our opinion and according to the information and explanations give to us, for purchase of services made in pursuance of contracts or arrangements entered into the register in pursuance Section. 301 of the Act, and exceeding the value of Rupees five lacs in respect of each party during the year, no comparison of prices could be made available as these services are of special nature.
xi.
According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.
xii. The provision of loans and advances on the basis of security by way of pledge of shares, debentures and other securities are not applicable to the Company. xiii. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company. xiv. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. xv. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.
v.
b.
xvi. The Company has not taken any term loans during the current year. xvii. On an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short term basis which have been used for long term investment. xviii. 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 during the year. xix. The Company has not issued any debentures during the year. xx. The Company has not raised any money by public issue during the year.
vi.
The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and Rules framed thereunder.
vii. In our opinion the Companys present internal audit system is commensurate with its size and the nature of its business. viii. The maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Act not applicable for the Company. ix. a. According to the information and explanations given to us the records of the Company examined by us, in our opinion, till date no material statutory liabilities become due as applicable with the appropriate authorities in India. According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, customs duty, income-tax and cess as at March 31, 2007, which have not been deposited on account of any dispute.
xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management. For Dokania S. Kumar & Company Dokani ania Kum umar Company Chartered Accountants
b.
x.
The Company has accumulated losses of Rs. 51,547,277.10 as on March 31, 2007.
Howrah May 16, 2007
ania Kum Dokani umar Sushil Kumar Dokania Partner
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Directors Report
The Directors of Walking Stick Solutions Private Limited have pleasure in presenting their Third Annual Report together with the Audited Accounts of the Company for the year ended March 31, 2007. orking Working Results Rs. 2006-07 Loss for the Year Add: Provision for Deferred Tax Add: Provision for Fringe Benefit Tax Add: Balance of Loss brought forward from previous year Balance of loss carried forward Dividend Due to loss during the year ended March 31, 2007, your Directors do not recommend any dividend. Directors Directors Mr. Provangshu Dutta, Mrs. Meera Dutta, Anindya Datta and Mr. V. Satish Kumar have expressed their willingness to be appointed as Directors of the Company and are eligible for the same. None of the Directors of the Company are disqualified for their appointment as Director under Section 274 of the Companies Act, 1956. Auditors The Auditors M/s. Dokania S. Kumar & Co., Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. egard Statemen of particulars ent regar Statement of particulars in regard to employees as per Section of the Companies Act, read Section 217(2a) of the Companies Act, 1956 read with Companies (Parti articulars of Rules, Companies (Particulars of Employees Rules, 1975). No employee during the year drew remuneration in excess of the limits prescribed under the said Section. Directors' Responsibility Statemen ent Directors' Responsibility Statement Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 your Directors confirm that: Kolkata May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director 2005-06 iii. i. in the preparation of the annual accounts for the financial year ended March 31, 2007 the applicable accounting standards had been followed by the management; the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year under review; the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; the Directors had prepared the accounts for the financial year ending March 31, 2007 on a going concern basis.
ii.
40,133,216 11,171,568 27,912 86,315 11,299,834 34,084 88,540 5,641 iv.
51,547,277 11,299,834
Relation ons Employee Relations During the year under review, there was cordial relation with the employees of the Company. cknowled emen owledg ent Acknowledgement The Board expresses its sincere thanks and appreciation to the staff members of the Company and the shareholders. Information as per Section 217(I) (e) of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rule, 1988 and forming part of the Directors Report for the year ended March 31, 2007. a. b. c. d. Conservation of Energy Research And Development Technology Absorption Foreign exchange earnings and outgo Foreign exchange earnings: Rs.1,62,99,249 Foreign exchange outgo: Rs.4,76,96,432 Not Applicable
For and on behalf of the board
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Balance Sheet as at March 31, 2007

Rs. Schdule SOURCES OF FUNDS Shareholders Funds ehold Shareholders Funds uthorised Authorised 5,000,000 shares of Rs.10 each ssued, Pai aid Issued, Subscribed & Paid up 4,999,550 shares of Rs.10 each (Previous year 15,000 Equity shares of Rs.10 each) (Out of 4,999,550 Equity Shares 1,623,000 Equity Shares issued for consideration other than cash during the year) Reserve & surplus Loan Funds Secured Loan Unsecured Loan (from Directors) Total APPLICATION CATI APPLICATION OF FUNDS Fixed Assets Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Investmen ents Investments dvances Curren Assets Loans Advan ent Current Assets Loans & Advances Sundry Debtors Cash and Bank Balances Other Current Assets ovision Curren Liabiliti ent abilities Provisi Less: Current Liabilities & Provision Sundry Creditors Advances Share Transfer Advance Other Current Liabilities Provisions Curren Assets ent Net Current Assets Miscellaneous Expenses (To the extent not written off or adjusted) Profit & Loss Account Total Accoun ccounts Notes on Accounts 10 2 1,094,987 201,757 893,229 2,323,377 3 4 5 97,785 9,219,365 371,188 9,688,338 3,264,340 442,939 170,783 5,810,276 39,266,840 51,547,277 99,841,000 NIL 6,761,035 81,223 6,842,258 103,620 200,000 17,945,952 133,848 (11,541,162) 347,300 11,299,833 420,000 328,380 14,351 314,029 1 99,841,000 As at arch March 31, 2007 As at March 31, 2006
50,000,000 49,995,500
1,000,000 150,000
49,845,500 270,000
270,000 420,000
6 7
Notes attached thereto form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our report of even date. For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner. M. No. 57020 Howrah May 16, 2007 Anind Anindya Datta Director Provangshu Dutta Provangshu ovangsh Director For and on behalf of the board
83
Profit and Loss Account For the period ended March 31, 2007
Rs. Schdule Income Income Software Services Exchange Gain Expenditure enditur Expenditure Salaries Marketing Expenses Delivery Services Fees Traveling Expenses Consultancy Fees Recruitment Expenses Telephone Expenses Electricity Charges Rent Car Hire & Running Expenses Auditors Remuneration Bank Charges Repair & Maintenance Fees & Subscription Data Communication Charges Rates & Taxes Postage Expenses Printing & Stationary Books & Periodicals Staff Welfare Filling Fees Directors Remuneration Entertainment Expenses Insurance Premium Previous year Expenditure Professional Tax Miscellaneous Expenses Depreciation Preliminary Exps. Written off for the Loss for the year Less Provision for Deferred Tax Liability Less Provision for Fringe Benefit Tax Loss after provision of taxes Loss brought forward from last year Loss carried to the Balance Sheet Accoun ccounts Notes on Accounts end Year ended arch March 31, 2007 16,299,249 7,050 16,306,300 3,008,104 35,605,382 13,692,822 1,828,934 232,992 208,766 273,538 115,813 222,000 132,079 109,461 14,534 135,767 1,360 268,629 10,020 9,039 47,838 2,073 80,809 3,350 110,000 37,349 3,201 8,128 2,500 83,621 187,406 4,000 56,439,516 (40,133,216) 27,912 86,315 (40,247,443) (11,299,833) (51,547,277) 10 Year ended March 31, 2006 403,000 9,053,000 1,046,276 235,560 255,881 20,734 30,000 8,830 18,938 3,636 22,476 8,000.00 20,202 1,155 110 6,605 506 13,058 5,250 14,351 4,000 11,171,568 (11,171,568) 34,084 88,540 (11,294,192) (5,641) (11,299,833)
Notes attached thereto form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our report of even date. For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner. M. No. 57020 Howrah May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director For and on behalf of the board
84
Schedules
Rs. end Year ended arch March 31, 2007 Schedule - 1 Reserve & Surplus Security Premium Account 49,845,500 49,845,500 Schedule-2 Fixed Assets Fixed Assets
Gross Block Depreciation Depreciation Net Block
Year ended March 31, 2006
Particulars
As at April 1, 2006 151,450 120,000 Nil 6,930 50,000 328,380
Additions during the year 244,050 374,859 141,036 6,662 Nil 766,607 328,380
As at March 31, 2007 395,500 494,859 141,036 13,592 50,000 1,094,987 328,380
As at April 1, 2006 4,594 7,757 Nil 854 1,146 14,351
For the year 32,226 117,678 29,353 1,352 6,795 187,406 14,351
As at March 31, 2007 36,820 125,435 29,353 2,206 7,941 201,757 14,351
As at March 31, 2007 358,679 369,423 111,682 11,385 42,058 893,229 314,029
As at April 1, 2006 146,856 112,243 6,075 48,854 314,028
Furniture & Fixture Computer Hardware Computer Software Office Equiptment Aircondition Total Work-in-progress Previous year figure
Rs. end Year ended arch March 31, 2007 Schedule - 3 Sund Sundry Debtors Over six months Unsecured - considered good Others Unsecured - considered good Total Schedule - 4 Cash & Bank Balances Cash on hand Balance in Current Account (with scheduled bank) Balance in Current Account (with non-scheduled bank) - overseas Total 3,809 8,573,578 641,978 9,219,365 10,202 6,750,833 6,761,035 97,785 97,785 Year ended March 31, 2006
85
Rs. end Year ended arch March 31, 2007 Schedule - 5 Other Current Assets Other Curren Assets ent Advance Fringe Benefit Tax Excess Payment to Seri Capital Security Deposit Staff Advance Total Schedule - 6 Other Current Liabilities Other Curren Liabiliti ent abilities Payable to Consultant Liability for Professional Tax Liability for TDS Outstanding Expenses & Salary Provident Fund Dues Share Application Money Total Schedule - 7 ovision Provisions Provisions Audit Fees Defered Tax Liability Fringe Benefit Tax Total 22,472 61,996 86,315 170,783 11,224 34,084 88,540 133,848 8,418 955 81,531 297,483 54,552 442,939 152,696 880 42,974 149,402 17,600,000 17,945,952 81,461 254,427 35,300 371,188 75,841 382 5,000 81,223 Year ended March 31, 2006
End Year Ended March 31, 2007

Schedule - 8 avelling Expenses Travelling Expenses Tours & Travels Local conveyance Accommodation Expenses Total 1,379,848 42,942 406,144 1,828,934 983,681 62,595 1,046,276
Schedule - 9 Welfare elfar Staff Welfare Staff Welfare Tea Expenses Medical Reimbursement Puja Ex-gratia Total 14,819 5,838 45,152 15,000 80,809 13,058 13,058
86
Schedule annexed to and forming part of the accounts

NO ACCOUNT CCOUNTS SCHEDULE - 10 NOTES ON ACCOUNTS 1. Current liabilities include advance of Rs.44,123 which is due to a body corporate in which the Directors of this Company are interested as Directors. Auditors' Remuneration 2007 Audit fees Certification fees Service Tax 20,000 77,500 11,961 109,461 3. Significant Accounting polices: i. These financial statements have been prepared in accordance with generally accepted accounting principals and accounting standards in India. The accounts have been prepared using historical cost convention and on the basis of a going concern, with revenue and expenses recognition on an accrual basis. Rs. 2006 10,000 7,000 1,938 18,938 8. 4. Preliminary expenses being amortized and charged to revenue account as per provision of Section 35D of Income Tax Act, 1961. Earnings in Foreign Currency (FOB Value): Rs.16,299,249 Expenditure in Foreign Currency: Rs.47,696,432 Investments consist of equity shares of Wholly Own Subsidiary Company in USA. During the year, share issue expenses of Rs.330,300 and Software Development fees of Rs.38,593,540 being amortized as Miscellaneous Expenditure. Deferred Tax Deferred tax assets have been currently recognized in the accounts as a measure of prudence and as recommended by the Accounting Standard 22 relating to taxation of income, issued by the Institute of Chartered Accountants of India. 9. Figures have been regrouped/ rearranged as and where required. For and on behalf of the board
2.
5. 6. 7.
ii.
For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner M. No. 57020 Howrah, May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director
Balance Sheet Abstract and Companies Business Profile

I. Registrati ation Registration Details Registration No. U72900WB2005PTC101077 Balance Sheet Date 31 03 Date Month 2007 Year II. Capital raised during the year (Amount in Rs. Thousands) Public Issue Right Issue NIL NIL
Bonus Issue Private Placement NIL 49845 ousands) osition of Mobilizati obilization Deploymen of Funds (Rs. Thousan ent III. Position of Mobilization & Deployment of Funds (Rs. Thousands) Application of Funds Total Liabilities Total Assets Applicati of Funds cation Net Fixed Assets Investments 99841 99841 893 2323 Sources of Funds Sources of Funds Net Current Assets Misc. Expenditure Paid up Capital Reserve & Surplus 5810 39267 49995 49845 Accumulated Losses Secured Loan Unsecured Loan 51547 NIL NIL IV. erformance of Company (Rs. Thousan orman ousands) IV. Performance of Company (Rs. Thousands) V. Generic Names of Principal Products/Services of the Turnover Total Expenditure Company (As per monetary terms) 16306 56439 Item Code No. Profit/(Loss) before Tax Profit/(Loss) after Tax Product Description : Not Applicable (40133) (40133) Earnings Per Share (Rs.) Dividend Rate (%) NIL NIL For and on behalf of the board For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Anind Provangshu ovangsh Sushil Kumar Dokania Anindya Datta Provangshu Dutta Partner Director Director M. No. 57020 Howrah, May 16, 2007
87
Consolidated Financial Statements of Walking Stick Solutions Private Limited
Auditors Report
The Members M/s. Walking Stick Solutions Private Limited We have audited the attached Consolidated Balance Sheet of M/s. Walking Stick Solutions Private Limited as at March 31, 2007 and Consolidated Profit & Loss Account of the Company for the year ended on that date, annexed. These Consolidated 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. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on the 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 over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets of Rs.1,150,792 as at March 31, 2007 and total revenues of Rs.66,842,535 for the year ended on that date. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of subsidiaries, is based solely on the report of the other auditors. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of Walking Stick Solutions Private Limited and its subsidiaries included in the consolidated financial statements. On the basis of the information and explanations given to us and on consideration of the separate audit reports on individual audited financial statements of Walking Stick Solutions Private Limited and its aforesaid subsidiaries, in our opinion, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: a. in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of Walking Stick Solutions Private Limited and its subsidiaries as at March 31, 2007: in the case of Consolidated Profit & Loss Account, of the consolidated result of operations of Walking Stick Solutions Private Limited and its subsidiaries for the year ended on that date.
b.
For Dokania S. Kumar & Company Dokani ania Kum umar Company Chartered Accountants
Howrah May 16, 2007
Kum Dokani umar ania Sushil Kumar Dokania Partner
88
Consolidated Balance Sheet as at March 31, 2007

Rs. As at arch March 31, 2007 SOURCES OF FUNDS Shareholders' Funds ehold Shareholders' Funds uthorised Authorised 50,00,000 shares of Rs. 10 each ssued, Pai aid Issued, Subscribed & Paid up 49,99,550 shares of Rs. 10 each Reserves & surplus Total APPLICATION CATI APPLICATION OF FUNDS Fixed Assets Gross Block Less: Accumulated Depreciation Net Block Investmen ents Investments Curren Assets Loans Advan ent dvances Current Assets Loans & Advances Sundry Debtors Cash and Bank Balances Other Current Assets ent abilities Provisi ovision Curren Liabiliti Less: Current Liabilities & Provision Sundry Creditors Other Current Liabilities Provisions Net Current Assets Miscellaneous Expenses (To the extent not written off or adjusted ) Profit & Loss A/c Total 39,266,840 50,622,552 99,841,000 1,794,285 9,453,612 691,130 11,939,028 1,422,593 2,173,586 435,263 7,907,585 2,686,739 642,716 2,044,022 50,000,000 49,995,500 49,845,500 99,841,000
Notes attached there to form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our report of even date. For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner M. No. 57020 Howrah, May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director For and on behalf of the board
89
Consolidated Profit and Loss Account For the period ended March 31, 2007
Rs. Schdule Income Income Software Services Exchange Gain Expenditur diture Expenditure Salaries Marketing Expenses Other Direct Expenses Delivery Service Fees Traveling Expenses Equipment and Systems Expenses Outside services/Consultency Recruitment Expenses Telephone Expenses Electricity Charges Rent Car Hire & Running Expenses Auditors Remuneration Bank Charges Repair & Maintenance Fees & Subscription Data Communication Charges Rates & Taxes Postage Expenses Printing & Stationary Books & Periodicals Staff Welfare Filling Fees Directors Remuneration Entertainment Expenses Insurance Premium Previous year Expenditure Professional Tax Miscellaneous Expenses Depreciation Preliminary Expenses written off Pro for the Profit for the year Less Provision for Deferred Tax Liability Less Provision for Fringe Benefit Tax Less Provision for taxes Loss after provision of taxes Loss brought forward from last year Loss carried to the Balance Sheet Notes attached thereto form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our report of even date. For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner M. No. 57020 Howrah May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director For and on behalf of the board end Year ended arch March 31, 2007 83,141,784 7,050 83,148,835 57,844,117 36,510,486 95,482 13,692,822 5,377,185 94,482 2,990,109 208,766 1,018,388 115,813 1,369,399 132,079 109,461 14,534 808,103 1,360 268,629 10,020 9,039 47,838 2,073 80,809 3,350 110,000 37,349 3,201 8,128 2,500 368,328 628,365 4,000 121,966,220 (38,817,385) 27,912 86,315 264,480 (39,196,092) (11,299,833) (50,495,925)
90
ACCOUNT CCOUNTS NOTES ON ACCOUNTS

formin part of the Consoli orming solid Balance Sheet Mar arch and Consoli solid Pro and Accoun for ccount Notes forming part of the Consolidated Balance Sheet as at March 31, 2007 and Consolidated Profit and Loss Account for the end Mar arch the year ended March 31, 2007 1. of Accounting ccountin Basis of Accounting The Consolidated Financial Statements of Walking Stick Solutions Private Limited ("The Company") and its wholly-owned foreign subsidiary (collectively referred to as "the Group") are prepare under the historical cast convention in accordance with generally accepted accounting principles in India and the Accounting Standard 21 on Consolidation of Financial Statements, issued by the Institute of Chartered Accountants of India to the extent possible in the same format as that adopted by the Company for its separate financial statements. 2. solid Financial Statemen anci ents Principles of Consoli Principles of Consolidated Financial Statements The consolidated financial statements have been prepared on the following basis: The financial statements of the Company and its Subsidiary Companies have combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses. Inter group balances and inter group transactions and resulting profits are eliminated in full.
3.
Forei Curren Transactions eign ency saction Foreign Currency Transactions Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the Profit & Loss Account. Foreign currency assets and liabilities at the year end are translated at the year end exchange rates, and the resultant exchange difference is recognized in the Profit and Loss Account. The Consolidated Financial Statements are prepared in Indian Rupees, which is the functional currency for the Company and its domestic subsidiaries. However US Dollar is the functional currency for its subsidiary located in United States. The transaction of US Dollar into the reporting currency, is performed for assets, liabilities, revenues, costs and expenses using the standard exchange rate of 1US Dollar = 43.50 Indian Rupees. There is no resultant exchange gain/loss on such transation.
4.
Income from software services in combined Profit & Loss Account includes sale of Walking Stick Solutions, Inc. to Walking Stick Solutions Private Limited of Rs.4,76,32,500
For and on behalf of the board For Dokania S. Kumar & Co. Dokani ania Kum umar Chartered Accountants Kum Dokani umar ania Sushil Kumar Dokania Partner M. No. 57020 Howrah, May 16, 2007 Anind Anindya Datta Director Provangshu ovangsh Provangshu Dutta Director
91
Corporate Information
Board Directors Board Of Directors
Ms. Madhavi Vuppalapati Mr. Satish Kumar Vuppalapati Mr. Srikanth Reddy Gaddam Dr. Satyapal Narang Mr. Omkar Srinivas Bhongir Mr. S. Lalith Prasad
Chairperson & Wholetime Director Managing Director Wholetime Director Non-Executive Director Non-Executive Director Non-Executive Director
Company Secretary Company Secretary A.N. Sarma Auditors Patwari & Co Chartered Accountants 3-6-659, Street No-9, Flat No-5B, Anushka Enclave, Himayathnagar, Hyderabad - 500 029 Bankers Bankers The Hongkong and Shanghai Banking Corporation Ltd (HSBC Bank) Standard Chartered Bank UCO Bank Axis Bank Limited
Registered and Corporate Office Registered and Corporate Office 10Q3-A1, 10th Floor, Cyber Towers, Hitec City, Madhapur, Hyderabad - 500 081 Tel +91 40 6684 6019 Fax +91 40 6684 6021
Overseas Offices USA Pittsburgh Seattle Chicago Los Angeles Parsippany (NJ) Europe Amsterdam Middle East Dubai Doha Singapore
92
orward looking statemen ents Forward looking statements

Throughout this report to the share owners, we discuss some of our expectations regarding the Companys future performance. All of these forward looking statements are based on our current views and assumptions. Actual results could differ materially from these current expectations and from historical performance. Our future results could also be affected by a variety of factors such as competitive dynamics in the market place, the impact of competitive products and pricing, product development, actions of competitors, changes in capital structure, changes in laws and regulations including changes in accounting standards, customer demand, effectiveness of marketing programs, economic conditions including changes in interest rates, and foreign economic conditions including currency rate fluctuations. The Company undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances.
Information Solution ormati ons Prithvi Information Solutions Limited

www.prithvisolutions.com
concept, research & production - CAPRICORN

AnnualReport2006-07 Prithvi

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Prithvi Information Solutions Limited Information Solution ormati ons

9th Annual Report 2006-07

Quality Poli olicy Quality Policy

Walking Stick Solutions Private Limited ......... 80 Corporate Information ................................. 92

the On the cover

Annual Report 2006-07

From the Desk of Chairperson

Annual Report 2006-07

Annual Report 2006-07

Five Year Financial Summary

2 002-03 2003-04 2004-05 2005-06

CAGR CAGR for 5 yrs

40.65 46.50 43.30 44.50

Annual Report 2006-07

Annual Report 2006-07

What motivates Prithvis breakthrough performance?

Annual Report 2006-07

A close look at the business

Annual Report 2006-07

Annual Report 2006-07

Our track record

Annual Report 2006-07

Annual Report 2006-07

What is our business model?

Annual Report 2006-07

What do our customers want?

We made a difference to them

Major Health Insurance player

Prithvi Team improved medical prior authorization process by a significant 40%.

Fortune 500 Telecom leader

Prithvi Analytics Solutions helped to improve customer profitability and retention.

Annual Report 2006-07

Why do our customers trust us so much?

Annual Report 2006-07

What does Prithvi do that sets it apart?

Differentiators enti Differentiators

Enabling nimble response to the client

Rapid adoption of quality processes

Customer focused Project Management

IT consulting and one-stop shop for technology requirements

Foothold and household strategy

Annual Report 2006-07

Is our growth sustainable?

Annual Report 2006-07

Drivers for scalable execution

Annual Report 2006-07

Superior talent management

World class processes & systems

Flexible delivery models

Annual Report 2006-07

The only asset not on the balance sheet

Annual Report 2006-07

Annual Report 2006-07

What are our challenges?

Annual Report 2006-07

Annual Report 2006-07

What is the outlook?

The road map

Grow to be a sizable player in the outsourcing market

Annual Report 2006-07

Management Discussion & Analysis

Annual Report 2006-07