NIIT Limited Regd. Office : B-234, Okhla Ind. Area, Phase-I, New Delhi

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2 Regd. Office : B-234, Okhla Id. Area, Phase-I, New Delhi Notice Notice is hereby give that the twety seveth Aual Geeral Meetig of the Members of will be held o Friday, 9th day of July, 2010, at 11:30 A.M. at Parklad Exotica, Khasra No. 123, Chattarpur Madir Road, Satbari, New Delhi , to trasact the followig busiess: ORDINARY BUSINESS 1. To receive, cosider ad adopt the Profit ad Loss Accout for the fiacial year April 1, 2009 to March 31, 2010 ad Balace Sheet as at March 31, 2010 ad the Reports of the Auditors ad the Directors thereo. 2. To declare divided o equity shares. 3. To appoit a Director i place of Mr. Suredra Sigh, who retires by rotatio ad, beig eligible, offers himself for re-appoitmet. 4. To appoit a Director i place of Mr. Rajedra S Pawar, who retires by rotatio ad, beig eligible, offers himself for re-appoitmet. 5. To appoit M/s Price Waterhouse, Chartered Accoutats (registratio umber FRN301112E), as Statutory Auditors of the Compay to hold office from the coclusio of this Aual Geeral Meetig till the coclusio of the ext Aual Geeral Meetig ad to authorize the Board of Directors to fix their remueratio. SPECIAL BUSINESS 6. PAYMENT OF COMMISSION TO NON-EXECUTIVE DIRECTORS OF THE COMPANY To cosider ad, if thought fit, to pass, with or without modificatio(s), the followig resolutio as a Special Resolutio: RESOLVED THAT pursuat to the provisios of Sectio 309 ad other applicable provisios, if ay, of the Compaies Act, 1956 (icludig ay amedmet ad/or re-eactmet thereof), ad subject to such ecessary approval(s), coset(s) or permissio(s), as may be required, the coset of the Compay be ad is hereby accorded to pay to its Directors (other tha Maagig / Whole-time Directors of the Compay) for a period of five fiacial years commecig from April 1, 2010, such commissio (at the discretio of the Board/ Committee of Directos, the paymet of such commissio may be made o a pro-rata basis every moth or o a aual basis or partly mothly ad partly o a aual basis) as may be determied by the Board/Committee of Directors from time to time (to be divided amogst them i such proportio/maer as may be determied by the Board/ Committee of Directors from time to time) however such commissio shall ot exceed the ceilig as prescribed uder Sectio 309(4) of the Compaies Act, 1956 i.e. 1% (oe percet) per aum of the et profits of the Compay as computed i accordace with the provisios of Sectio 198(1), 349 ad 350 of the Compaies Act, RESOLVED FURTHER THAT the Board of Directors of the Compay be ad are hereby authorised to do all such acts, deeds, matters ad thigs as may be cosidered ecessary, proper or expediet i order to give effect to the above resolutio. Place : New Delhi Dated : May 7, 2010 NOTES: By Order of the Board For Parvee Jai Compay Secretary & Legal Cousel 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. PROXIES, IN ORDER TO BE EFFECTIVE, MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. A BLANK PROXY FORM IS ATTACHED WITH ANNUAL REPORT. 1

3 Regd. Office : B-234, Okhla Id. Area, Phase-I, New Delhi Notice (Cotd.) 2. The Explaatory Statemet pursuat to Sectio 173(2) of the Compaies Act, 1956 i respect of Special Busiess as set out above to be trasacted at the Meetig is aexed hereto ad forms part of this Notice. 3. The Members/ Proxies are requested to brig their copy of the Aual Report with them at the Meetig ad to produce the admissio slip, duly completed ad siged, at the etrace for admissio to the meetig hall. 4. Corporate Members itedig to sed their authorised represetatives to atted the Meetig are requested to sed a certified true copy of the Board Resolutio authorizig their represetative to atted ad vote o their behalf at the Meetig. 5. Notice alogwith explaatory statemet, Aual Report as well as Aual Accouts of the subsidiary compaies ad Register of Directors Shareholdig are ope for ispectio, durig the busiess hours, at the Registered Office of the Compay. 6. Statutory Auditors certificate certifyig that the Compay s stock optio pla has bee implemeted i accordace with the SEBI (Employees Stock Optio Scheme ad Employees Stock Purchase Scheme) Guidelies, 1999, ad i accordace with resolutios passed by the Members, will be available at the Meetig for ispectio by the Members. 7. The Register of Members ad Share Trasfer Books of the Compay shall remai closed durig the Book Closure period, i.e., from Friday, July 2, 2010, to Friday, July 9, 2010, both days iclusive. The divided as recommeded by the Board of Directors, if declared at the Meetig, will be paid to those Members whose ames appear i the Compay s Register of Members as o July 9, 2010, for shares held i physical form ad the list of beeficial owers as furished by the Depositories (NSDL ad CDSL) as of the close of busiess hours o July 1, 2010 for shares held i electroic form. 8. While Members holdig shares i physical form may write to the Compay for ay chage i their address ad bak madates, Members havig shares i electroic form may iform ay chage i address ad bak details to their depository participat immediately so as to eable the Compay to dispatch divided warrats at correct address. 9. The Members holdig shares i the same ame or same order of ames uder differet folios are requested to sed the share certificates for cosolidatio of such shares to the Compay. 10. The Members desirous of appoitig their omiees for the shares held by them may apply i the Nomiatio Form (Form 2B). 11. I order to provide protectio agaist fraudulet ecashmet of divided warrats, Members holdig shares i physical form are requested to provide their bak accout umber, ame ad address of the bak/brach to eable the Compay to icorporate the same i the divided warrat. 12. All uclaimed/upaid divided up to the fiacial year eded o September 30, 2002, have bee trasferred to the Ivestor Educatio ad Protectio Fud of the Cetral Govermet pursuat to Sectio 205A of the Compaies Act, Members who have ot so far ecashed divided warrat(s) for the fiacial year eded March 31, 2004 ad thereafter are requested to approach the Compay by writig a letter to the Compay at Registered Office address, immediately. 13. The Members desirous of obtaiig ay iformatio/ clarificatio cocerig the accouts ad operatios of the Compay are requested to address their questios i writig to the Compay Secretary at least te days before the Aual Geeral Meetig, so that the iformatio required may be made available at the Meetig. 14. The Compay whole-heartedly welcomes Members/Proxies at the Aual Geeral Meetig of the Compay, however, the Members/Proxies may please ote that o gifts/ gift coupos will be distributed at the Meetig. 2

4 Regd. Office : B-234, Okhla Id. Area, Phase-I, New Delhi Notice (Cotd.) 15. Iformatio pursuat to Clause 49 of the Listig Agreemet pertaiig to the Directors proposed to be reappoited vide Item Nos. 3 ad 4 of the Notice, are as follows: Particulars Mr. Suredra Sigh Mr. Rajedra S Pawar Date of Birth July 21, 1937 March 6, 1951 Date of Appoitmet March 20, 2001 December 2, 1981 Qualificatios IAS B. Tech Expertise i specific fuctioal area Directorship held i other public limited compaies (excludig Foreig Compaies) Membership (M)/ Chairmaship (C) of Committees of other public limited compaies (icludes oly Audit Committee (AC) ad Shareholders /Ivestors Grievace Committee (SIGC) Detailed i the Corporate Goverace Report for the fiacial year i. CMC Limited ii. Jubilat Orgaosys Limited iii. NIIT SmartServe Limited iv. NIIT Techologies Limited i. NIIT Techologies Limited(AC-M) ii. Jubilat Orgaosys Limited (AC-M) iii. Jubilat Orgaosys Limited (SIGC-M) iv. CMC Limited (SIGC-C) v. CMC Limited (AC-M) vi. NIIT SmartServe Limited(AC-M) Detailed i the Corporate Goverace Report for the fiacial year i. NIIT Techologies Limited ii. NIIT Olie Learig Limited iii. Hole-i-the-Wall Educatio Limited iv. NIIT SmartServe Limited v. NIIT GIS Limited vi. NIIT Multimedia Limited vii. Scatech Evaluatio Services Limited viii. Nestle Idia Limited ix. Pace Services Limited x. Istitute of Quality Limited xi. IT Ifrastructure Developmet Corporatio Limited xii. NIIT Istitute of Process Excellece Limited i. Pace Services Limited (AC-C) ii. Nestle Idia Limited (AC-M) iii. Scatech Evaluatio Services Limited (AC-M) iv. Hole-i-the-Wall Educatio Limited (AC-M) v. NIIT SmartServe Limited (AC-M) Number of equity shares held i the Compay 56, ,000 Relatioship with other Directors Noe Noe 3

5 Regd. Office : B-234, Okhla Id. Area, Phase-I, New Delhi Notice (Cotd.) EXPLANATORY STATEMENT (PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956) Item No 6 The Members of the Compay had approved the paymet of commissio to No- Executive Directors for a period of five years with effect from April 1, 2005, subject to a ceilig of 1% (oe percet) per aum of et profits of the Compay i ay fiacial year (computed i the maer provided i Sectio 198(1) of the Compaies Act, 1956). The said period has expired o March 31, As the Compay eed to have a optimum Board structure costitutig Executive ad No-Executive Directors ad cosiderig the fact that to have qualified ad Idepedet Directors o the Board ad their valuable busiess ad professioal advice ad i view of ature of work ad resposibilities etrusted upo No-Executive Directors ad also time devoted ad the cotributio made by them, it is proposed that the Compay should cotiue to pay the commissio for aother 5 (five) years commecig from April 1, 2010, for a amout as may be decided by the Board of Directors/Committee of Directors, from time to time, but ot exceedig 1% (oe percet) per aum of the et profit of the Compay as provided uder Sectio 309(4) of the Compaies Act, 1956 or ay amedmets or modificatios thereto. Such commissio shall be divided amogst No Executives Directors i such maer as the Board of Directors/Committee of Directors may from time to time determie ad the same may be paid to No-Executive Directors o a pro-rata basis every moth or o a aual basis or partly mothly ad partly o a aual basis as the Board of Directors/ Committee of Directors deem fit, subject to such ecessary approval(s), coset(s) or permissio(s), as may be required. All the No-Executive Directors may be deemed to be cocered or iterested i this resolutio. The Board of Directors commeds the resolutio for your approval. Place : New Delhi Dated : May 7, 2010 By Order of the Board For Parvee Jai Compay Secretary & Legal Cousel 4

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7 OUR VISION VALUES, MOTIVES AND BELIEFS WE, NIIT, BELIEVE THAT OUR GROWTH IS THE DERIVATIVE OF THE GROWTH OF EACH ONE OF US. IT IS THE DUTY OF EACH ONE OF US TO ESPOUSE AND GIVE ACTIVE EFFECT TO THE VALUES, MOTIVES AND BELIEFS WE STATE HERE NIIT IS PEOPLE WE HAVE POSITIVE REGARD FOR EACH ONE OF US WE WILL FOSTER CAREER-BUILDING BY CREATING OPPORTUNITIES THAT DEMAND LEARNING, THINKING AND INNOVATION FROM EACH ONE OF US. WE EXPECT EACH OF US TO CONTRIBUTE TO THE PROCESS OF ORGANISATION BUILDING AND THUS DERIVE PRIDE, LOYALTY AND EMOTIONAL OWNERSHIP. WE RECOGNISE THE NECESSITY OF MAKING MISTAKES AND RISK-TAKING WHEN IT CONTRIBUTES TO THE LEARNING, INNOVATION AND GROWTH OF EACH ONE OF US. NIIT IS QUALITY AND VALUE EACH OF US WILL ENSURE THAT IN ANY ASSOCIATION WITH SOCIETY, SOCIETY BENEFITS SUBSTANTIALLY MORE THAN: (A) WHAT SOCIETY GIVES TO US. (B) WHAT SOCIETY WOULD GAIN FROM ANY OTHER SIMILAR ASSOCIATION WE WILL MEET ANY AND EVERY COMMITMENT MADE TO SOCIETY IRRESPECTIVE OF ANY COST THAT MAY HAVE TO BE INCURRED. WE WILL ENSURE OUR PROFITABILITY, LONG-TERM GROWTH AND FINANCIAL STABILITY, THROUGH THE PROCESS OF DELIVERING THE BEST, BEING SEEN AS THE BEST AND BEING THE BEST. WE WILL BE FAIR IN ALL OUR DEALINGS AND PROMOTE HIGH STANDARDS OF BUSINESS ETHICS. NIIT IS A MISSION WE WILL GROW IN THE RECOGNITION AND RESPECT WE COMMAND, THROUGH PIONEERING AND LEADING IN THE EFFECTIVE DEPLOYMENT OF TECHNOLOGY AND KNOW-HOW. WE WILL SEEK TO PLAY A KEY-ROLE IN THE DIRECTIONS AND DEPLOYMENT OF TECHNOLOGY AND KNOW-HOW FOR THE BENEFIT OF MANKIND.

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9 ANNUAL REPORT Cotets Page No. Corporate Iformatio 4 Fiacial History 5 NIIT at a Glace 6 Directors Report 10 Maagemet Discussio ad Aalysis 19 Corporate Goverace Report 33 Fiacial Statemet of 49 Fiacial Summary of Subsidiary Compaies 92 Cosolidated Fiacial Statemet of (Group) 93 Proxy Form ad Attedace Sheet 135 3

10 CORPORATE INFORMATION Board of Directors Rajedra S. Pawar Chairma ad Maagig Director Vijay K. Thadai Whole-time Director P. Rajedra Whole-time Director Subroto Bhattacharya Director Suredra Sigh Director Sajay Khosla Director Compay Secretary & Legal Cousel Parvee Jai Ashok Arora Jiteder Mahaja Auditors Price Waterhouse Baks ICICI Bak Idia Overseas Bak Stadard Chartered Bak Citibak NA BNP Paribas Wachovia Bak of Georgia Bak of the West B-234 Okhla Phase - I New Delhi , Idia (Ivestor Services): ivestors@iit.com Tel : Fax : , Sector 32, Istitutioal Gurgao , Idia iit.webmaster@iit.com Tel : +91-(124) Fax : +91-(124) Registrar ad Share Trasfer Aget Alakit Assigmets Ltd. Uit - Alakit House 2E/21, Jhadewala Ext. New Delhi , Idia Tel : , Fax : Website 4

11 FINANCIAL HISTORY REVENUES & PROFITABILITY (Rs. M) ASSETS & LIABILITIES (Rs. M) Applicatios of Fuds 5

12 NIIT at a Glace 6

13 NIIT has provided computer-based learig to over 12,000 govermet ad private schools across the coutry cumulatively impactig lives of more tha 8 millio kids. Last year aloe, NIIT reached out to more tha a millio kids through learig solutios, istalled i more tha 4700 schools. NIIT further stregtheed its leadership positio i the Govt. sector by gettig ew orders for IT educatio ad IT eabled educatio projects as well as extesio ad repeat orders from govermets of Assam, Adhra Pradesh, Gujarat ad Rajastha. Some of the highlights of school learig solutios by NIIT are: 7

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16 DIRECTORS REPORT Dear NIIT Shareower, Your Directors take pleasure i presetig the 27 th Aual Report alog with the audited statemet of accouts for the fiacial year eded March 31, Fiacial Highlights The highlights of your Compay s fiacial results for the fiacial year April 1, 2009 to March 31, 2010 are as follows: (Rs. M.) Despite global recessioary coditios, your Compay s cosolidated icome from operatios has icreased to Rs. 11,993 millio as agaist Rs. 11,486 millio i the previous year, registerig a growth of 4.42% over the previous year, while Net Profit (after Associates Profit) is Rs.702 millio as agaist Rs. 698 millio i the previous year. The icome from operatios for the year uder review for the Compay o a stadaloe basis icreased to Rs. 6,252 millio as compared to Rs. 5,456 millio i the previous year, thereby registerig a growth of 14.58% o yearly basis ad Net Profit dipped from Rs. 472 millio i the year to Rs 312 millio i the curret year. Busiess Operatios The year started with widespread global ecoomic crisis ad extreme risk aversio by customers, resultig i cut back o ivestmet ad recruitmet. I this eviromet, the Compay focused o profitability through efficiet cost maagemet ad scale back ivestmets. However, the eviromet has show chages i the last quarter ad there were sigs of global ecoomic recovery, strog growth projectios for Idia, Chia ad other emergig ecoomies ad retur of busiess cofidece with projectios of robust recruitmet across sectors. This positive eviromet at the year ed resulted i the positive growth i most busiesses ad reewed focus o ew products ad ew iitiatives. Durig the year uder review, your Compay partered with various globally recogized techology compaies like IBM, SAP ad expaded its product portfolio by lauchig various ew programs like Futurz: GNIIT IMS Track, Diploma i Fiace & Accouts, ERP Traiig for SMB segmets etc. The Compay has recetly etered ito a Global Partership with Idira Gadhi Natioal Ope Uiversity (IGNOU) for Educatio & Skill Buildig to ehace employability. The School Learig Solutios cotiue to cater to the requiremets of private ad govermet schools for IT ad IT eabled educatio. Durig the year, your Compay saw a acceleratio of iterest by may State Govermets for providig IT educatio i schools. Your Compay has secured two ew major cotracts from the states of Gujarat ad Adhra Pradesh besides the reewal of cotracts for existig schools from Chhattisgarh ad Assam. I Learig Solutios for Eterprises Busiess, your Compay improved its margis through meticulous short term expese maagemet, cost variabalizatio, as well as ratioalized sales ad product ivestmet despite overall shrikage of traiig budgets by corporates. Durig the year, your Compay lauched basic eglish ad professioal life skills traiig for cosumers uder the brad NIIT Eglish Plus. The Eglish for Life product is desiged to upgrade the skills ad employability of adolescet youth ad college-goig populatio i rural ad semi-urba markets across Idia. This busiess is at a pilot stage with potetial for major growth. Future Plas Beside the three existig core competecies of growth of your Compay i the past i.e. Pedagogy, Techology ad Parterships, the Compay will also focus its eergy o its ew capabilities like ew techology based delivery models, learig libraries, school maagemet systems etc. This will result i scalig up customer access, improved margis ad a wider global reach. Share Capital The Compay has allotted 112,611 equity shares of Rs. 2 each to the employees uder NIIT Employee Stock Optio Pla Accordigly, the paid-up share capital of your Compay stads icreased from Rs. 329,965,972 to Rs. 330,191,

17 DIRECTORS REPORT (Cotd.) Debetures Your Compay has raised Rs. 600 millio by issue of Usecured Redeemable No-Covertible Debetures (NCDs) to Stadard Chartered Bak (SCB) o private placemet basis i the year uder review. The NCDs issued to SCB are listed at the Natioal Stock Exchage of Idia Limited (NSE). Divided I view of the Compay s profitable performace, your Directors are pleased to recommed, for approval of the Members at the esuig Aual Geeral Meetig, a divided of Rs per equity share of Rs. 2 each. Trasfer to Reserves I accordace with statutory provisios, your Compay has trasferred a sum of Rs. 31 millio to the Geeral Reserve ad Rs. 202 millio to the Debeture Redemptio Reserve. Awards ad Ackowledgmets Durig the year uder review, your Compay received may recogitios at the iteratioal ad atioal levels. Some of them are: Service Provider i the Bakers Doze Customer Satisfactio 2010 Ratigs - a listig brought out by the reputed HRO Today magazie. Award for Gree Traiig by LearX Asia Pacific Coferece. Leadership Traiig Compaies award by Traiig Idustry, Ic. Traiig brad i Chia, o the eve of 60 years of People s Republic of Chia celebratios. Gold for Excellece i elearig award by Chief Learig Officer (CLO) Magazie as part of its Learig i Practice Awards, oe of the idustry s highest hoors for the secod cosecutive year. three awards at the Digital Learig Awards at eindia 2009 Summit - Idia s largest ICT evet. the 4th year i a row. Award 2009 by Cybermedia, for the 17th successive year. CISCO ad Microsoft for Subsidiary Compaies NIIT Chia (Shaghai) Limited, a step dow subsidiary compay, has icorporated Wuxi NIIT Iformatio Techology Cosultig Limited i Chia ad further Wuxi NIIT Iformatio Techology Cosultig Limited has icorporated Chagzhou NIIT Iformatio Techology Cosultig Limited i Chia durig the year uder review. Cosequetly, these two ewly icorporated compaies have become step dow subsidiary compaies of your Compay. Further, Imperia Chia (Shaghai) Limited ad NIIT Middle East WLL, Bahrai have ceased to be step dow subsidiary compaies. PCEC NIIT Istitute of Iformatio Techology, a step dow subsidiary compay, has passed the resolutio for its volutary liquidatio ad also ceased its operatios. As per the provisios of Sectio 212 of the Compaies Act, 1956 (hereiafter referred to as the Act ), your Compay is required to attach the Directors Report, Balace Sheet, Profit ad Loss Accout ad other iformatio of the subsidiaries to its Balace Sheet. Your Directors believe that the audited cosolidated accouts preset a full ad fair picture of the state of affairs ad fiacial coditios of the Compay ad its subsidiaries, as is doe globally. Hece, the Compay made a applicatio to the Miistry of Corporate Affairs, seekig exemptio from the requiremet of attachig the Directors Report, Balace Sheet, Profit ad Loss Accout ad other iformatio of the subsidiaries to its Balace Sheet. The approval of the Cetral Govermet has bee received vide letter No. 47/182/2010-CL-III dated March 25, Accordigly, the Aual Report of your Compay does ot cotai separate fiacial statemets of its subsidiaries, but cotais audited cosolidated fiacial statemet of the Compay ad its subsidiaries. However, a statemet of the Compay s iterest i the subsidiaries ad a summary of the fiacials of the subsidiaries are give alog with the cosolidated accouts. The aual accouts of the subsidiaries, alog with the related iformatio, will be made available to the Members seekig such iformatio at ay poit of time. The aual accouts of the subsidiaries are also available for ispectio for ay Member/ Ivestor, durig the busiess hours, at the Registered Office of the Compay ad the same ca be accessed from the website of the Compay i.e. Cosolidated Fiacial Statemets I compliace with Clause 32 of the Listig Agreemet, the cosolidated fiacial statemets are prepared i accordace with the Accoutig Stadards otified uder Sectio 211(3C) of the Act read with the Compaies (Accoutig Stadards) Rules, The 11

18 DIRECTORS REPORT (Cotd.) cosolidated fiacial statemets together with Auditors Report thereo form part of the Aual Report. Delistig of Shares Your Compay had volutarily applied for delistig of equity shares from The Calcutta Stock Exchage Limited (CSE) uder the SEBI (Delistig of Securities) Guidelies, 2003 i the year Pursuat to the applicatio, CSE has approved the delistig of the equity shares by way of a letter o. CSE/LD/31/2010 dated March 19, However, the equity shares of the Compay shall cotiue to be listed at the Natioal Stock Exchage of Idia Limited (NSE) ad Bombay Stock Exchage Limited (BSE). Corporate Goverace Your Compay s philosophy o Corporate Goverace evisages the attaimet of the highest levels of trasparecy, accoutability ad equity i all facets of its operatios as well as i all iteractios with its Stakeholders icludig Shareholders, NIITias, Leders ad Regulatory Authorities. I order to ehace customer satisfactio ad stakeholder value, your Compay cotiues to bechmark its Corporate Goverace practices with the best i the world i lie with iteratioal orms. Your Compay has complied with all the requiremets relatig to Corporate Goverace as stipulated i Clause 49 of the Listig Agreemet. The report of the Directors o Corporate Goverace is give as a separate sectio titled Corporate Goverace Report, which forms part of the Aual Report. The Auditors Certificate cofirmig the compliace to the coditios of the Corporate Goverace stipulated i Clause 49 of the Listig Agreemet is aexed to the Corporate Goverace Report. Maagemet Discussio ad Aalysis Report As required by Clause 49 of the Listig Agreemet, the Maagemet Discussio ad Aalysis Report is aexed ad forms part of the Directors Report. Directors Mr. Shardul S Shroff has stepped dow from the Directorship of the Compay w.e.f. May 7, Mr. Shroff was associated with the Compay sice The Board placed o record the immese cotributio made by Mr. Shroff durig his teure as a Director i your Compay. I accordace with the provisios of the Act ad Articles 64, 65 ad 66 of the Articles of Associatio of your Compay, Mr. Rajedra S Pawar ad Mr. Suredra Sigh, Directors of your Compay, retire by rotatio ad due for electio at the esuig Aual Geeral Meetig, however they beig eligible, offer themselves for re-appoitmet. Directors Resposibility Statemet As required uder Sectio 217 (2AA) of the Act, the Board of Directors of your Compay hereby states ad cofirms: fiacial year, applicable Accoutig Stadards have bee followed alog with the proper explaatios relatig to material departures; described i the otes to accouts, which have bee cosistetly applied, except where otherwise stated ad made judgmets ad estimates that are reasoable ad prudet so as to give a true ad fair view of the state of affairs of the Compay as at March 31, 2010 ad of the profit or loss of the Compay for that year; for the maiteace of adequate accoutig records i accordace with the provisios of the Act, for safeguardig the assets of the Compay ad for prevetig ad detectig fraud ad other irregularities; the historical cost covetio, as a goig cocer basis ad o accrual basis. Iformatio relatig to Coservatio of Eergy, Techology Absorptio, Research ad Developmet, Exports, Foreig Exchage Earigs ad Outgo ad other iformatio formig part of the Directors Report i terms of Sectio 217(1)(e) of the Act, ad the Rules made thereuder a) Coservatio of eergy Although the operatios of the Compay are ot eergy itesive, the maagemet has bee highly coscious of criticality of coservatio of eergy at all the operatioal levels ad efforts are made i this directio o a cotiuous basis. Adequate measures have bee take to reduce eergy cosumptio wheever possible by usig eergy efficiet equipmets. The requiremet of disclosure of particulars with respect to coservatio of eergy as prescribed i Sectio 217 (1) (e) of the Act read with the Compaies (Disclosure of Particulars i the Report of Board of Directors) Rules, 1988, are ot applicable to the Compay ad hece are ot provided. b) Techology absorptio The Compay realizes that i order to stay competitive ad avoid obsolescece, it would have to ivest i ew techology across multiple product lies ad services offered by it. Hece, the Compay is makig every effort to develop methods for adaptig ad effectively deployig ew techologies. 12

19 DIRECTORS REPORT (Cotd.) c) Research ad Developmet The Compay believes that techological obsolescece is a reality. Oly progressive research ad developmet will help us to measure up to future challeges ad opportuities. We ivest i ad ecourage cotiuous iovatio. Durig the year uder review, expediture o research ad developmet is ot sigificat i relatio to the ature ad size of operatios of your Compay. d) Foreig exchage earigs ad outgo i) Activities relatig to exports, iitiatives take to icrease exports, developmet of ew export markets for products ad services ad export plas. The Compay exports customized learig cotet to its overseas cliets to meet their varyig learig eeds. The Compay develops cotet i a multitude of subjects for widely varied audiece. The Compay will cotiue to stregthe its presece i Chia, South Africa, Nigeria, ew territories icludig Bhuta, Maldives ad Columbia, with a view to icrease exports. The Compay will put impetus o potetial geographies for expasio of its busiess outside Idia. ii) Foreig exchage earigs ad outgo The details of foreig exchage earigs ad outgo are metioed i Notes Nos. 11,12, 13 ad 14 cotaied i the Notes to Accouts (Schedule No. 20) formig part of the Balace Sheet ad Profit ad Loss Accout for the fiacial year eded March 31, Public Deposits I terms of the provisios of Sectio 58A of the Act read with the Compaies (Acceptace of Deposits Rules), 1975, your Compay has ot accepted ay fixed deposits from public ad, as such, o amout of pricipal or iterest was outstadig o the date of the Balace Sheet. Particulars of Employees Particulars of employees as required uder Sectio 217 (2A) of the Act, read with the Compaies (Particulars of Employees) Rules, 1975 are give i Aexure-I ad forms part of this report. Auditors ad Auditors Report M/s Price Waterhouse, Chartered Accoutats (registratio umber FRN E), the Statutory Auditors of your Compay, holds office util the coclusio of the esuig Aual Geeral Meetig ad are eligible for reappoitmet. The Compay has received a letter from them to the effect that their reappoitmet, if made, would be withi the limits prescribed uder Sectio 224 (1B) of the Act ad that they are ot disqualified for reappoitmet withi the meaig of Sectio 226 of the Act. The otes o Accouts referred to i the Auditors Report are self explaatory ad do ot require for ay further commets. Huma Resources ad Employees Stock Optio Scheme NIITias are the key resource for your Compay. Your Compay has bee able to create ad cotiuously improve a favourable work eviromet that ecourages ovelty ad meritocracy at all levels. Employees relatios remaied cordial at all the Compay s locatios. The Directors take this opportuity to record their appreciatio for the outstadig cotributio of all NIITias. Your Compay had durig the fiacial year lauched NIIT Employee Stock Optio Pla 2005 (ESOP-2005) with the objective of attractig ad motivatig employees by rewardig performace ad retaiig the best talet. The aim was to develop a sese of owership amog the employees withi the orgaisatio ad to alig your Compay s stock optio scheme with the best practices i the Idustry. Durig the year uder review, the Compesatio/ Remueratio Committee has grated 61,41,130 at market price to eligible employees uder ESOP The particulars of the Optios grated, vested, exercised ad allotted uder the ESOP-2005 as required to be disclosed uder SEBI (Employee Stock Optio Scheme ad Employee Stock Purchase Scheme) Guidelies, 1999, are appeded as Aexure-II ad form part of this report. Further, oe of the employees was grated optios equal to or exceedig 1% of the issued capital of the Compay. Ackowledgemets Your Directors take this opportuity to thak all ivestors, cliets, licesees, techology parters, vedors, fiacial istitutios, baks, regulatory ad govermetal authorities, media ad stock exchages for their cotiued support durig the year uder review. For ad o behalf of the Board Rajedra S Pawar Chairma & Place : New Delhi Maagig Director Date : May 7, 2010 DIN

20 DIRECTORS REPORT (Cotd.) Aexure - I Iformatio as per Sectio 217(2A) of the Compaies Act, 1956 read with Compaies (Particulars of Employees) Rules, 1975 ad formig part of the Directors Report for the year eded March 31, 2010 A. Employed throughout the year ad i receipt of remueratio ot less tha Rs. 24,00,000 for the year 14

21 DIRECTORS REPORT (Cotd.) B. Employed for part of the year ad i receipt of remueratio ot less tha Rs. 2,00,000 per moth NOTES : 1. The gross remueratio show above comprises salary, allowaces, icetives, moetary value of perquisites as per the Icome Tax Rules ad Compay s cotributio to Providet Fud ad Superauatio Fud. 2. The gross remueratio of employees do ot iclude provisio for gratuity ad provisio for leave ecashmet. 3. Noe of the above employees are related to ay Director of the Compay. 4. Noe of the employees holds 2% or more of the paid-up equity share capital of the Compay. 5. The ature of employmet i all above cases is cotractual. 15

22 DIRECTORS REPORT (Cotd.) Aexure - II Iformatio relatig to NIIT ESOP-2005 uder SEBI (Employee Stock Optio Scheme & Employee Stock Purchase Scheme) Guidelies, 1999 (as o March 31, 2010) (a) Optios grated the split i the face value of the share from Rs. 10 per share to Rs. 2 per share (b) Pricig formula At a price ot less tha the the existig face value of the share of the Compay: (c) Optios vested No. of shares Pre bous & split Post bous & split Grat I 519,050 - Grat II 26,350 - Grat III - 456,581 Total 545,400 1,693,631 (d) Optios exercised No. of shares Pre bous & split Post bous & split Grat I 413, ,002 Grat II 21,800 34,125 Grat III - - Total 435, ,127 16

23 DIRECTORS REPORT (Cotd.) (e) The total umber of shares arisig as a result of exercise of optio No. of shares Pre bous & split Post bous & split Grat I 413, ,002 Grat II 21,800 34,125 Grat III - - (f) Optios lapsed (icludes optios ot vested based o proformace parameter) Total 435, ,127 No. of shares Pre bous & split Post bous & split Grat I 40, ,696 Grat II 19,850 - Grat III - 423,323 Total 60, ,364 Nil (h) Moey realized by exercise of optios Rs. 91,521,258 /- (i) Total umber of optios i force 7,601,012 (post bous ad split) (j) Employee wise details of optios grated to: (i) seior maagerial persoel as uder: (ii) ay other employee who receives a grat i ay oe year of optio amoutig to 5% or more of optio grated durig that year (iii) idetified employees who were grated optios durig ay oe year, equal to or exceedig 1% of the issued capital (excludig outstadig warrats ad coversios) of the Compay at the time of grat (k) Diluted Earigs Per Share (EPS) pursuat to issue of shares o exercise of optio calculated i accordace with [Accoutig Stadard(AS) 20 Earigs Per Share (l) Where the compay has calculated the employee compesatio cost usig the itrisic value of the stock optios, the differece betwee the employee compesatio cost so computed ad the employee compesatio cost that shall have bee recogized if it had used the fair value of the optios, shall be disclosed. The impact of this differece o profits ad o EPS of the compay shall also be disclosed - 238,450 (Pre bous ad split) - 1,072,875 (Post bous ad split) ^Oly summary give because of sesitive ature of iformatio are oe level below the Board of Directors. Nil Nil Rs Please refer to Notes Nos. 1(vii) ad 16 cotaied i the Notes to Accouts (Schedule No. 19) formig part of the Balace Sheet ad Profit ad Loss Accout for the fiacial year eded o March 31,

24 DIRECTORS REPORT (Cotd.) (m) Weighted-average exercise prices ad weighted-average fair values of optios shall be disclosed separately for optios whose exercise price either equals or exceeds or is less tha the market price of the stock Weighted average exercise price Weighted average fair value Grat I* Grat II* Grat III* Grat IV Grat V Grat VI () A descriptio of the method ad sigificat assumptios used durig the year to estimate the fair values of optios, icludig the followig weighted-average iformatio: Grat I Grat II Grat III Grat IV Grat V Grat VI (i) risk-free iterest rate 7% 7% 7.93% 9.24% 6.89% 6.50% (ii) expected life 2.5 years 2.5 years 2.5 years 2.5 years 3.5 years 3.5 years (iii) expected volatility 14% 14% 45.47% 51.81% 66.48% 66.23% (iv) expected divideds Not cosidered Not cosidered 2.79% 2.04% 1.76% 1.76% (v) the price of the uderlyig share i market at the time of optio grat Rs Rs Rs Rs Rs Rs

25 MANAGEMENT DISCUSSION AND ANALYSIS Eviromet The fiacial year saw a sigificat shift i ecoomic treds from a ucertai outlook i the begiig of the year to cautious optimism at the ed of the year. The year started with: global ecoomic turmoil with widespread fear of a ecoomic collapse recessioary treds i may global ecoomies extreme risk aversio resultig i cut back o ivestmets ad recruitmet across sectors The eviromet chaged dramatically at the year ed: there were sigs of ecoomic recovery globally, strog growth projectios for Idia, Chia ad other emergig ecoomies a retur of busiess cofidece with projectios of robust recruitmet across sectors I this eviromet, ( NIIT or the Compay ) started the year with: flat to egative year-o-year i most busiesses for the first quarter focus o profitability through efficiet cost maagemet ad scale back o ivestmets This altered oticeably by the year ed: positive growth retured i most busiesses aggressive push to growth ad profitability as well as reewed focus o ew products ad ew iitiatives The year closed amid recoverig world markets ad brighteig setimet, puctuated itermittetly by the recedig aftershocks of the global ecoomic crisis. Employmet witessed a reboud effect amog rapidly developig ecoomies like Idia & Chia. However volatility i eergy prices, exchage rates ad iflatio do ot show ay sigs of subsidig ad icreasigly appear to have become the ew facts of life. I this eviromet, the educatio ad traiig sector remais a key determiat of ecoomic growth ad recovery, both for Idia ad rest of the world. Govermets are icreasigly lookig to educatio ad skill developmet to promote ecoomic growth: Idia Parliamet Extesive fudig ad policy reforms are occurrig i Idia with Skills developmet ad vocatioal traiig high o the ageda of the Govermet ad the Plaig Commissio Educatio (NCTE) Idia is poised to reap the beefits of the demographic divided based o a youg populatio. However, Idia s demographic advatage will arise oly from productivity improvemet ad tacklig the followig challeges: Idia has the largest ueducated ad utraied populatio ad Low erolmets ad high drop-out rates i school educatio

26 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) The govermet is tryig to trasform the educatio ad traiig sceario through the followig framework to reach the plaed outcomes. NIIT, by virtue of its stregths, has a crucial role to play i the emergig sceario. Over the last three decades, NIIT has grow from beig a IT traiig compay to a global talet developmet corporatio ad has developed key competecies. Compay Performace Over the last 5 years, the Compay has show cosistet improvemet i its performace. NIIT i this Eviromet NIIT is well positioed to further cosolidate its leadership positio i Global Talet Developmet. NIIT is focused o improvig academic performace, employability ad workforce productivity through its busiess offerigs i Idia, Chia, other emergig labour supply chai with its offerigs. 20

27 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) The Compay s performace for the year is reflected i the table below: Rs. Millios FY 10 FY 09 Chage - terest, taxes depreciatio ad amortizatio) 11,993 4% 32% Profit before tax 493-1% -2% Share of profits from associates % / attributable to miority shareholders Profit after tax 1% % The Compay saw a improvemet i its et reveues ad profitability durig the year with: growth), ad learig solutios: Idividual IT Traiig: the Compay provided IT/ITES traiig to idividuals iterested i pursuig a career i IT/ITES or upgradig their IT skills through parterships with techology compaies. These programmes were provided across Idia, Chia ad other emergig ecoomies. New Busiesses: Fiace & Maagemet Traiig: the Compay offered traiig programmes to idividuals i bakig, isurace, fiace ad maagemet. These programmes were offered through iovative busiess models ivolvig parterships with leadig baks, isurace compaies as well as leadig maagemet istitutes. BPO Traiig: ito a joit veture with Gepact to offer kowledge ad traiig i busiess processes 21

28 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) ad soft skills to address the icreasig demad for skilled workers i the busiess & techology services idustry. Basic Eglish Traiig: the Compay commeced basic Eglish ad Professioal Life skills traiig for idividuals uder the brad ame NIIT Eglish Plus. The Eglish for Life product is desiged to upgrade the skills ad employability of adolescet youth ad collegegoig populatio i rural ad semi-urba markets across Idia. Olie Traiig: the Compay bega offerig a wide rage of olie courses to workig professioals via its web site Schools: the Compay catered to the requiremets of Govermet ad private schools for IT educatio, multimedia educatio for all subjects ad teachers traiig. Corporate: the Compay provided ed to ed solutios, from developmet to deploymet, of traiig curriculum to Govermet ad corporate sector. Product offerigs icluded Learig products, Traiig outsourcig ad Custom projects. Busiess overview Idividual Learig Solutios busiess was led by Edgeieers ad IMS product lies, with strog uptake i GNIIT erolmets towards the recorded a overall erolmet growth of 12 percet over previous year. Idia New products leveragig Techology Parterships - Durig the year, the Compay lauched ew traiig programs i partership with: techologies world-leadig busiess software, Eterprise - ad other emergig ecoomies. etered ito a Global Partership for Educatio orgaizatios pla to joitly offer programs i Iformatio Techology ad Maagemet Expaded product portfolio by lauchig the followig programs: IT Traiig The Idividual Learig Solutios cotiued to focus o providig skill sets to people for the IT & ITES idustry thereby improvig the idividual employability for the sixth c o s e c u t i v e year. The Compay saw 22

29 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) a 40 percet icrease i umber of registratios for the test which was simultaeously coducted i 22 cities across Idia. u m e r o u s e g a g e m e t s with the studets, parets ad Traiig & P l a c e m e t Officers i colleges, i partership with our Techology Parters, through uiquely braded semiars Sure-Shot. challegig recruitmet eviromet which prevailed durig most of the period, the Compay saw a icrease i the placemets of its studets by 25 percet. Chia operatios by brigig 3 ew Govermet-assisted NIIT cetres live i Dalia, Chegdu & Chagzhou. I additio, NIIT ramped up its capacity i Wuxi New District represetig NIIT s largest such facility aywhere i the world. Together, this group of Govermet-assisted ceters, situated iside software parks, offers studets a wide complemet of NIIT courses to choose from. The Compay added ew Cisco Learig Parter - These programs offer Su, Microsoft, Cisco ad - sioals ad ready to eter the workforce graduates, with the aim to equip the studets with idustry relevat IT ad soft skills, to make them employmet ready. Other Emergig Ecoomies NIIT Wuxi Cetre o select high potetial geographies. To this ed, the Compay stregtheed its presece i South Thailad. The Compay orgaized myriad coutry evets to lauch products, evagelize parters, ad spread the word. These evets icluded the - arship i Nigeria was held uder the baer Skill up Nigeria as well as the first ever Global Parter techology parters Microsoft, Su, Cisco ad Oracle to mark the rollout of ew versios of flagship programs. Fiacials of ILS - IT Traiig Rs. Millios FY 10 FY 09 Chage OM% 23% 22% New Busiesses 9% 14% Durig the year, the Compay cosolidated its Maagemet Educatio, with the two busiesses NIIT Imperia completig their 3rd year of operatios. weatherig the bakig sector crisis which cotiued through the rebouded strogly i the secod half whe hirig retured to the sector. To exploit the full extet of sectios of society. NIIT Imperia cotiued to establish its uique model of Executive Maagemet Educatio that combies programs offered by world-class maagemet istitutes with the geographical reach made possible by NIIT s Sychroous Learig Techology. Durig the year, it siged fresh partership agreemets with MDI Gurgao to offer joit maagemet developmet 23

30 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) programs, KPMG IMI for Strategic Digital Marketig programs. It also lauched ew IIM-L ad Supply chai with IIM-C. The NIIT Istitute of Process Excellece was set up i joit participatio with uder the brad ame of NIIT idustry s most comprehesive traiig curriculum for existig ad prospective employees of busiess services ad techology compaies. Durig stabilized its ow operatios ad bega to reach out across Idia through the exteded NIIT Cetre etwork. Professioal Life skills traiig for idividuals uder the brad ame NIIT Eglish Plus. The Eglish for Life product is desiged to upgrade the skills ad employability of adolescet youth ad college-goig populatio i rural ad semi-urba markets across Idia. Its uique methodology icludes audio-visual soudbites ad rich iteractive learig cotet facilitated by local Eglish traiers. Eglish is taught i the cotext of a wide variety of professioal situatios, ledig a aura of autheticity ad leveragig each sceario to prepare the youth for the world of work. leverage large cross-sectios of the Elemet K cotet by offerig it directly to cosumers aroud the world. Fiacials of New Busiesses Rs. Millios FY 10 FY 09 Chage School Learig Solutios (152) % The School Learig Solutios provides products ad services for IT traiig ad for techology eabled learig & teachig for schools. Cetral & State Govermets cotiued their thrust to sigificatly expad the base of schools providig IT educatio schemes. The Compay saw a sigificat umber of teders floated by the State govermets. The Compay cotiued with its selective approach to these teders ad its strategy of balacig growth ad capital itesity. Of the total teders awarded durig the year, the Compay received ew orders from the of cotracts for existig schools from Chhattisgarh rage of olie courses to workig professioals this ew busiess represets a additioal method to 24

31 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) of schools serviced cumulatively to more tha fiftee thousad. comprehesive suite of products ad solutios uder the NIIT e-guru brad. NIIT e-guru provides a holistic educatio package to the schools addressig the eeds of all key stakeholders withi the educatio realm Studets, Teachers, School maagemet ad Parets, The product suite lauched last year saw ecouragig respose from schools. Durig the year, the Compay overhauled its legacy IT Wizard product icludig the Programmig ad Productivity Curriculum as well as Web ad Multimedia, further stregtheig its e-guru offerig for schools comprisig of Iteractive Classrooms for teachers, school maagemet. Fiacials for School Learig Solutios Rs. Millios FY 10 FY 09 Chage 2,000 45% 214 OM% 15% 15% ad drive reseller support programs icludig traiig, ew licesig/ partership/ developmet models to accelerate expasio of busiess skills portfolio. Durig the year, the Compay executed high impact features ad ehacemets i KHub, its proprietary Learig Maagemet System. It further streamlied its olie delivery site for iteratioal users, thereby achievig markedly faster ad more secure successfully targeted growth i for-profit educatio ad publishig, with strog future prospects i the pipelie as well. I delivery, the Compay has achieved very high Customer Satisfactio scores with perfect ratigs frequetly beig received from cliets. NIIT offers its customers a ed-to-ed solutio. Corporate Learig Solutios fought to improve profitability i the backdrop of a global fiacial crisis ad shrikig corporate traiig budgets. This was accomplished through meticulous short term expese maagemet, cost variabalizatio as well as ratioalized sales ad product ivestmets. The Compay expaded market awareess with coordiated/ liked direct marketig, advertisig ad Fiacials for Corporate Learig Solutios s Chage 5, % OM% 3% 490 bps Durig the year, the busiess clocked a order itake advertisig, direct marketig, white papers ad idustry evet presetatios. It worked to formalize, ehace, 25

32 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) Recogitios NIIT wo 4 Platium, 15 Gold ad 3 Silver cat- Scidia School, Gwalior, Madhya Pradesh Civil society / Developmet agecy Iitiative of the year - Hole i the Wall Educatio Govermet / Policy Iitiative of the year - Implemetatio of Shared Computig NIIT has bee hooured as the - Most ifluetial - lece i elearig award by Chief Learig Officer (CLO) Magazie as part of its Learig i Pracfor the secod cosecutive year. Top 125 List techology i the Traiig Outsourcig Idustry i 2009, by TraiigOutsourcig.com for the third cosecutive year. 2009, preseted by CIO Magazie (a part of the has bee hoourig exceptioal work i IT leadership worldwide for the past 22 years. NIIT has received this recogitio for the pioeerig work doe o revampig our website: NIIT was coferred the Top IT Traiig Compay group Cybermedia, the publisher of Dataquest. (NIIT has bee gettig this award successively for - egory). the 4th year i a row i July 2009 CISCO ad Microsoft i 2009 NIIT ICT eabled Learig Solutios bagged the followig awards i the digital learig category at eidia 2009, Idia s Largest ICT evet Pradesh - brads Coucil. NIIT is the oly Idia Educatio compay to be Slumdog Millioaire wo the Oscars i The movie was based o the book Slumdog Millio- Swarup. The author credits Hole-i-the-Wall Educatio Ltd. (HiWEL) as his ispiratio for the book. Cosolidated Fiacial review of the Compay Rs. Millio FY 10 FY 09 Chage 11,993 4% Operatig Expeses 10,425 10,300 1% - Persoel Cost 3,339-10% - Developmet, Productio & Executio costs 12% fiace costs) - Marketig 955 OM% 13% 10% Net Other Icome (330) (45) 32% Profit before taxes 493-1% Taxes 104 4% % attributable to Miority shareholders Profit after tax attributable to equity 1% holders % Previous year data ot regrouped Reveues The Compay recorded a 4 percet icrease i the drive primarily by the School Learig Solutios busiess. The ecoomic slowdow especially i the developed coutries as well as the sigificat

33 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) Net other icome expeses for the Compay as well as the capital gai o mutual fud, ivestmets ad other miscellaeous Compay durig the year to fud its capital expediture icludig ew projects i the Schools busiess ad for ew busiess iitiatives. Detailed Aalysis of Cosolidated Balace Sheet as o March 31, 2010 Rs. Millio Particulars March 31, 2010 March 31, 2009 Sources of Fuds Share Capital Miority Iterest 21 Employee Stock Optio outstadig - 1 4,444 Net Worth 5,064 4,781 Secured Loas 2,535 2,521 1,510 Loa fuds 4,046 3,481 Total 9,110 8,262 Applicatio of Fuds Fixed Assets to the NIIT Istitute of Iformatio Techology, which is Expeses O a overall basis, the operatig expeses icreased growth due to: Developmet, productio ad executio expeses icreased by 12 percet due to the chages i product mix Compay ramped up its marketig campaig to improve market share as well as to lauch its ew iitiatives i the secod half of the year. Depreciatio 3,221 Net Block 4,916 5,114 Capital Work i Progress Ivestmets 1, Miscellaeous Expediture 1 1 Total 9,110 8,262 Share Capital Durig the year, the share capital of the Compay icreased margially due to issuace of shares to employees upo exercise of vested optios. Reserves ad Surplus the fiacial statemets of foreig subsidiaries ito ad a variabalisatio of the salary costs i lie with the volatile markets offset the above icrease substatially ad The cost maagemet iitiatives started by the telecom ad premise expeses cotiued through the year ad this also aided i reducig the fixed costs durig the year. The icrease i depreciatio is attributable to the additio of assets durig the year especially for the Schools projects. liabilities of o-idia subsidiaries are traslated at the year-ed exchage rate. Icome ad Expediture items are traslated at predetermied rates that approximate the exchage rate prevailig o the date of the trasactio. The resultat traslatio adjustmet is reflected as a separate compoet of Shareholders Loa Fuds overseas operatios. The debt was raised to fud the cash flow requiremets ad reduce the cost of borrowigs of the Compay. Durig the year, the

34 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) term loa The outstadig icluded: Secured No Covertible debetures: March 31, 2009, represetig 104 days sales outstadig. This icrease is attributable to the chages i busiess mix ad due to loger collectio cycles i govermet ad corporate collectios. This has also resulted i the outstadig over six moths icreasig from 24 percet to 32 percet. Cash ad Bak The cash ad bak balaces as o March 31, Workig capital debt: year the Compay: Overseas workig capital debt: Deferred lease obligatios ad other loas: Fixed Assets 5,114 millio. Durig the year, the Compay ivested of the opeig capital work i progress. The additio was for the followig: Projects i the Schools busiess: New iitiatives & products: Capacity expasio & upgradatio: Normal capital expediture: millio as Capital work i progress. The Net block Ivestmets icludig purchase of fixed assets for the School busiess projects ad of payig iterest ad divided as well as repayig debt. Other Curret Assets Other curret assets icluded iterest receivable ad ubilled reveues. The balace as of March Loas ad Advaces Loas ad advaces icluded, advaces to suppliers, deferred expeses, ret advaces, security deposits give for premises, advace tax paid as well as loas give to the NIIT Educatio Society, NIIT Istitute of millio which icluded the holdig value of: NIIT Techologies Limited: Ivestmets i debt schemes of mutual fuds: Net Curret Assets The elemets of et curret assets were as follows: Ivetories Ivetories maily icluded traiig material icludig educatioal software used by the Compay for impartig IT-ITES educatio. Over the year, the value of the ivetory held by the Compay 31, Curret Liabilities is primarily attributable to the decrease i sudry creditors (icludig capital creditors). Curret liabilities cosists of sudry creditors icludig capital creditors, advaces from customers, security deposits, deferred reveues ad other liabilities. Provisios Trade Receivables

35 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) Accoutig Policies The Compay has selected the accoutig policies described i the otes to accouts, which have bee cosistetly applied, except where otherwise stated ad made judgmets ad estimates that are reasoable ad prudet so as to give a true ad fair view of the state of affairs of the Compay as at March 31, 2010 ad of the profit or loss of the Compay for that year. Related Party Trasactios of the Compay of a material ature with Promoters, Directors or the Maagemet, their subsidiaries or other related parties who may have a potetial coflict with the iterest of the Compay at large. There were o material trasactios durig the year uder review that were prejudicial to the iterests of the Compay. Huma Resources The Compay has bee built o the foudatios of people beig the key drivers to growth of the espouses mutual positive regard, career buildig ad providig opportuities for learig, thikig, iovatio ad growth. The Compay offers a eviromet where all-roud developmet is as much of a goal as realizatio of career ambitios. improvig people productivity through traiig ad developmet of its people. the cost maagemet iitiatives udertake by the Compay to reduce its fixed costs give the ecoomic the guidig priciples beig arms legth, fairess ad trasparecy. The details of related party trasactios Tax matters Durig the last quarter of the fiacial year eded March 31, 2010, the Compay received Show Cause sales ad marketig ad the balace i idirect roles. by the Commissioer of Icome Tax for the assessmet certai items. The quatum of Icome Tax demad, if ay, has either bee quatified or ascertaied ad thus, idetermiable at this stage. These orders have bee challeged by the Compay i the Icome Tax the Compay is cofidet that appeals so filed shall be decided i its favor. Reveue Recogitio Policy followed by are disclosed i Note 1 of the year. Reserves reserves did ot reflect ay reserves o accout of revaluatio of assets. 29

36 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) Future Outlook The buildig blocks for NIIT s growth are i place with: - ades of existece, will remai foudatioal to its future maagemet relatioships New capabilities Learig libraries New Delivery models Olie assessmet systems School Maagemet System Olie Learig Library Low cost traiig ceters Macro Treds are favorable with: Icreased govermet spedig Icreasig profits of the corporate sector Idicatios of large hirig plas across sectors Icrease i employee salaries Erolmets growth Growth i placemets Competitive wis Profitability improvemet The Compay has a multi dimesioal growth strategy set to: Icrease depth Grow horizotally Expad Coverage NIIT Iside model 30

37 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) School Learig Solutios The Compay s busiess specific outlook ad strategy set icludes: Idividual Learig Solutios IT Traiig Corporate Learig Solutios Risk ad Cocers of risks across our etire rage of busiess lie / operatios. I broadest sese, the Compay perceives risks as the dager of ot achievig fiacial, operative ad strategic goals set to be achieved durig the year. NIIT has a comprehesive risk maagemet structure i place, which is iteded to eable the Compay to recogize ad aalyse risks early ad to put a appropriate mitigatio pla i place. This system is implemeted as a itegral part of NIIT s busiess processes across the Compay. It costitutes of multiple cotrol mechaisms with major ad importat costituets of the decisio makig process. These mechaisms iclude recordig, moitorig ad cotrollig iteral eterprise processes ad busiess risks with a comprehesive risks reportig system. Through the said mechaism, NIIT s edeavor is to maximize the stakeholders value by maitaiig a steady balace betwee risks ad returs. 31

38 MANAGEMENT DISCUSSION AND ANALYSIS (Cotd.) as the previous year ad therefore applicatio of prove to provide the real beefits. The cotiuig slowdow across the globe, which resulted i adverse busiess growth across may corporates but with a the importace ad beefits of such process. I spite of cotiuig slow ecoomy growth, IT idustry has always thrived o a dyamic ad highly competitive busiess eviromet due to rapid techological chages ad iovatio globally which forced everyoe to chage their existig busiess model. NIIT has addressed the techological chages ad effects of iovatio by dyamically chagig its busiess structures globally. Sice risk takig is a itrisic part of busiess growth ad the risks emerge either from exteral eviromets or from iteral opportuities for growth but which have iheret risks, therefore it has bee NIIT s costat edeavor to balace risk appetite i each of its existig busiess lies to esure that each of the busiesses are geeratig high risk adjusted returs. Prioritizatio of key risks is sigificat ad NIIT has take upfrot iitiatives to idetify the risks, defie the risk matrix framework ad documet them i cosultatio with the busiess groups. NIIT s risk matrix framework addresses all the sigificat risks of the busiesses as evisaged by the maagemet from time to time based o past experiece ad existig eviromet surroudig for each busiess activity alog with a mitigatio strategy for the same. The mitigatio strategy is simultaeously addressed by the respective busiess group for each idetified risk while fializig strategic ad operatioal parameters ad compliaces idetified by the Compay with mitigatio strategy i place are: ad Techology Obsolescece; ad - The Compay is well diversified, both i terms of geography ad the services it offers. With its balaced mix of reveues comig from Idividual, Istitutioal ad Corporate customers, across multiple vertical domais, it is well positioed to maage ay slowdows i oe part of its product portfolio or a specific geography. The Compay believes that with maagemet processes i place ad reports placed to regular itervals. Iteral Cotrol Systems ad its adequacy The Compay has adopted bechmarked practices for iteral cotrols followed worldwide, based o its extesive global operatioal experiece. It has also global operatios to itegrate various facets of busiess Logistics ad Sales. This has eabled the Compay to cotrol ad moitor its worldwide operatios olie ad stregtheed the ability of iteral cotrols to fuctio most optimally. Disclaimer Ivestors are cautioed that this discussio cotais forwards lookig statemets that ivolve risks ad ucertaities. Whe used i this discussio, words like aticipate, believe, estimate, ited, will, ad expect ad other similar expressios as they relate the Compay or its busiess are iteded to idetify such forward-lookig statemets. The Compay udertakes o obligatios to publicly update or revise ay forward-lookig statemets, whether as a result of ew iformatio, future evets, or otherwise. Actual results, performaces or achievemets could differ materially from those expressed or implied i such statemets. Readers are cautioed as ot to place udue reliace o the forward-lookig statemets as they speak oly as of their dates. The MD&A should be read i cojuctio with the Compay s fiacial statemets icluded herei ad the otes thereto. Iformatio provided i this MD&A pertais to ad its subsidiaries o a cosolidated basis, uless otherwise stated. - 32

39 CORPORATE GOVERNANCE REPORT Your Compay believes that strog compaies are built o the foudatio of good goverace practices. Corporate Goverace ecompasses the effective maagemet of relatioships amog costituets of the ecosystem - shareholders, maagemet, staff members, customers, vedors, govermets, regulatory authorities ad commuity at large. These relatioships ca be stregtheed through corporate fairess, trasparecy, empowermet ad compliace with the law i letter ad spirit. It takes proactive approach ad revisits its goverace practices from time to time so as to meet busiess ad regulatory eeds. COMPANY S PHILOSOPHY ON CORPORATE GOVERNANCE Your Compay s philosophy o Corporate Goverace is aimed at optimizig the balace betwee stakeholders iterests ad corporate goals through the efficiet coduct of its busiess ad meetig their obligatio i a maer that is guided by trasparecy, accoutability ad itegrity. It has always bee believed that a idepedet Board followig iteratioal practices, trasparet disclosures ad empowermet of stakeholders are as ecessary as solid fiacial results for creatig ad sustaiig shareholder s value. Your Compay is coscious of its resposibility as a good corporate citize ad is committed to a high stadard of Corporate Goverace practices. At NIIT, value creatio is a philosophy that is ubiquitous across the orgaisatio. Stakeholders are the focus of Compay s growth strategy. The Compay has esured stability ad growth i a dyamic eviromet ad i competitive times. This has bee the Compay s commitmet sice iceptio. The fabric of Corporate Goverace i the Compay is wove with trasparecy, idepedece ad commitmet for creatig wealth for its Shareholders. BOARD OF DIRECTORS Compositio Your Compay is maaged ad guided by a professioal Board comprisig of six Directors of which three are Idepedet Directors, costitutig half of the Board s total stregth. Your Compay s Board comprises of emiet persos with cosiderable professioal expertise ad experiece. The Idepedet Directors of the Compay meet all the criteria madated by Clause 49 of the Listig Agreemet. The Board s role, fuctios, resposibilities ad accoutability are clearly defied. I additio to its primary role of moitorig corporate performace, the fuctios of the Board iclude: Articulatig the corporate philosophy ad missio; Formulatig strategic plas; Reviewig ad approvig fiacial plas ad budgets; Moitorig corporate performace agaist strategic plas icludig overseeig operatios; Esurig ethical behaviour ad compliace with laws ad regulatios; Reviewig ad approvig borrowig/ledig, ivestmet limits ad exposure limits, etc.; Keepig Shareholders iformed about plas, strategies ad performace. The compositio of the Board of Directors is i coformity with the stipulatio laid dow i the code of Corporate Goverace recommeded by the Securities ad Exchage Board of Idia (SEBI) through Clause 49 of the Listig Agreemet of the Stock Exchages. Compositio of the Board* ad their Director Idetificatio Number (DIN) Note: 1. No Director is related to ay other Director o the Board i terms of the defiitio of relative give uder the Compaies Act, * Mr. Shardul S Shroff has stepped dow from the Board of the Compay effective from May 7, 2010 A brief profile ad role of each of the Directors is give below: Mr. Rajedra S. Pawar Desigatio: Chairma ad Maagig Director Profile: Mr. Pawar is the Chairma ad co-fouder of NIIT. A distiguished alumus of the premier IIT Delhi, he is kow for promotig idustry-academia alliaces ad has bee workig closely with the coutry s well-kow educatioal istitutios. He is a established thought leader i the idustry. Mr. Pawar is 33

40 CORPORATE GOVERNANCE REPORT (Cotd.) a member o the Prime Miister s Natioal Coucil o Skill Developmet; has served o the PM s Natioal Taskforce commissioed to develop Idia ito a IT Superpower; is a advisor to the Hua provice of Chia; ad was a member of PIAC (Presidetial Iteratioal Advisory Coucil) of the Govermet of South Africa for IT. He is actively ivolved i Idia s key Chambers of Commerce ad has led several ICT idustry iitiatives, givig voice to the sector s aspiratios ad goals. He has bee a Fouder Member of the Natioal Associatio of Software ad Service Compaies (NASSCOM). He is curretly a member of the Iteratioal Busiess Coucil of the World Ecoomic Forum. Recogisig his pioeerig ad etrepreeurial work i the educatio ad software sectors, Global Busiess Itelligece firm, Erst & Youg coferred o Mr. Pawar its prestigious Master Etrepreeur of the Year Award i His cotributios to the IT idustry i Idia have also eared him the IT Ma of the Year award istituted by IT idustry joural, Dataquest. He serves o the Board of Goverors of Idia Istitute of Techology, Delhi, Idia School of Busiess, Idia Istitute of Maagemet, Bagalore ad the Scidia School. He is also a member of Plaig Commissio s task force o skill developmet. Roles ad Resposibilities: Mr. Pawar plays a major role i providig thought leadership ad strategic iputs to the Compay i additio to supervisig the fuctioal heads of Corporate Developmet, Strategic HR ad Corporate Commuicatios. Mr. Vijay K. Thadai Desigatio: Chief Executive Officer ad Whole-time Director Profile: Mr. Thadai is the CEO ad co-fouder of NIIT. As CEO of NIIT, Mr. Thadai has built a orgaisatio that is recogized for its iovative efforts of takig computer educatio to the masses. He has led the Compay s globalizatio effort sice 1991, takig NIIT flag to over 40 coutries. He metored NIIT s Strategic Alliace Programme that resulted i successful acquisitios of leadig techology ad traiig compaies to fill i critical techology gaps i NIIT s software solutios ad corporate solutios offerigs ad to gai customer access. Mr. Thadai is deeply ivolved i stregtheig ad cosolidatig NIIT s presece i the Chiese market, where the Compay has begu operatios i 1998 ad ow has presece across 25 provices i Chia ad has a etwork of over 170 ceters i that coutry. He was hooured with the positio of Ecoomic Cosultat to Chogquig, oe of the world s largest city i the People s Republic of Chia. Mr. Thadai has headed may Idustry Associatios ad Societies icludig the Idia IT idustry associatio, MAIT. He has also chaired the Idia Govermet s Committee o Natioal Iformatio Ifrastructure Policy. He has also served as the Chairma of the IT Committee of CII i the Uited States ad has led delegatios to Korea, Japa, Taiwa, Chia ad the Uited States to promote Idia s IT capability. He is curretly the Chairma of CII Natioal Committee o Educatio ad Vice Chairma, CII Norther Regio. A distiguished alumus of the premier IIT Delhi, Mr. Thadai has lectured at prestigious istitutios icludig the Uiversity of Michiga Busiess School, the J L Kellogg Graduate School of Maagemet ad the Idia Istitutes of Maagemet (IIMs). Roles ad Resposibilities: Mr. Thadai s resposibilities iclude leadig NIIT s Strategic Alliace iitiative, the Techology partership iitiative ad leveragig growth opportuities i additio to overseeig the Fiace, Legal ad Secretarial ad Ivestor Relatios fuctios. He oversees NIIT s Global Learig Busiess ad as Chairma of NIIT Istitute of Fiace Bakig ad Isurace Traiig Limited ad Evolv Services Limited, he oversees the operatios of these compaies. Mr. P. Rajedra Desigatio: Chief Operatig Officer ad Whole-time Director Profile: Mr. P. Rajedra, Director & Chief Operatig Officer, joied the Compay i 1982 ad is part of the core team that has developed the orgaizatio ad brought it to its preset positio of iteratioal stadig. He is a alumus of Idia Istitute of Techology, Delhi. Today, Mr. Rajedra leads the People iitiatives, Ifrastructure & Techology Services ad the legal compliaces at NIIT. He facilitates the Compay s thrust with Govermets i may coutries for skills developmet i public private partership. A people perso ad a believer i leveragig Iformatio Techology for Huma Resources competitiveess ad iovatio, he has helped NIIT emerge as oe of the 34

41 CORPORATE GOVERNANCE REPORT (Cotd.) most excitig places to work, i the Idia IT Idustry. The Compay has received may awards i recogitio of its iovative HR practices. Mr. Rajedra is actively associated with idustry associatios like CII, NASSCOM ad FICCI. He is member of the CII Africa Coucil ad the CII Natioal Committee o Skills, Huma Resources ad Idustrial Relatios. He is o the Cetral Board of Trustees of Employees Providet Fud Orgaizatio ad o the Board of Maagemet of Guru Gobid Sigh Idraprastha Uiversity. He takes kee iterest i the area of deploymet of Iformatio & Commuicatio Techologies (ICT) for huma developmet ad creatio of ew jobs. Roles ad Resposibilities : Mr. Rajedra assists the CEO i the maagemet of operatios of the Compay. I additio, he leads the corporate teams egaged i Huma Resources, Commercial Services, Iformatio Resources ad Legal Services. Mr. Subroto Bhattacharya Desigatio: Idepedet Director Profile: Mr. Subroto Bhattacharya, a Chartered Accoutat with over 33 years of experiece, specialises i fiace ad maagemet cosultacy. He has bee part of the core team i several reputed orgaisatios. He was ivited to NIIT s Board as a Idepedet Director i Roles ad Resposibilities: Mr. Bhattacharya advises NIIT o fiacial ad maagemet issues ad is the Chairma of the Audit Committee ad the Compesatio/Remueratio Committee. Mr. Suredra Sigh Desigatio: Idepedet Director Profile: Mr. Suredra Sigh has served i the Cetral ad State Govermets as a IAS Officer. Startig his Public Service i 1959, Mr. Sigh has held positios like Special Secretary to the Prime Miister of Idia, resposible for all the ecoomic work i the PM s Office, Cabiet Secretary to the Govermet of Idia, Secretary to the Coucil of Miisters ad Secretary, Miistry of Idustry. He was a Executive Director o the Board of the World Bak, represetig Idia, Bagladesh, Sri Laka ad Bhuta. He was Director o the Boards of the Iteratioal Fiace Corporatio (IFC) ad the Multilateral Ivestmet Guaratee Agecy (MIGA). Mr. Suredra Sigh was ivited to NIIT s Board as a Idepedet Director i Roles ad Resposibilities: Mr. Sigh advises NIIT o Iteral Cotrols, Audit Systems, Compesatio Structure ad Ivestor Relatios. He Chairs the Shareholders / Ivestors Grievace Committee of Board of Directors. Mr. Sajay Khosla Desigatio: Idepedet Director Profile: Mr. Sajay Khosla joied Kraft Foods, Ic., i Jauary 2007, as Presidet Iteratioal, resposible for the compay s over US $15 billio busiess outside of North America. Before joiig Kraft Foods, he was the Maagig Director of Foterra Brads, the cosumer arm of Foterra Co-operative Group Limited, New Zealad s largest multi-atioal compay ad oe of the world s biggest dairy compaies. As Maagig Director of Foterra Brads, Mr. Khosla maaged a busiess that spas more tha 40 coutries ad has aual reveues of approximately US$3 billio. Prior to this, Mr. Khosla was Seior Vice Presidet, Global Beverages, Uilever ad Chairma of that compay s Global Board for the beverages category. Durig his 27 year career with Uilever, Mr. Khosla held seior positios i Idia, Europe ad the Uited Kigdom. Mr. Khosla is a alumus of the premier IIT, Delhi, ad has completed a Advaced Maagemet Programme from Harvard Uiversity. Mr. Khosla was ivited to NIIT s Board as a Idepedet Director i Roles ad Resposibilities: Mr. Khosla advises NIIT o brad buildig, marketig strategy, remueratio policies ad other matters. He is a member of Compesatio/ Remueratio Committee. Board Meetigs The Board of Directors met 7 (Seve) times durig the fiacial year o the followig dates: The Compay holds at least four Board meetigs i a year, oe i each quarter to review the fiacial results. Apart from the four scheduled Board meetigs, additioal Board meetigs are also coveed to address the specific requiremets of the Compay. Urget matters are also approved by the Board by passig 35

42 CORPORATE GOVERNANCE REPORT (Cotd.) resolutios through circulatio. The gap betwee two Board meetigs ever exceeds four moths. All Directors o the Board are free to suggest ay item for iclusio i the ageda for the cosideratio of the Board. The ecessary iformatio as metioed i Aexure 1A to Clause 49 of the Listig Agreemet has bee placed before the Board for their cosideratio. The Board ad/or Committees have, iter-alia, addressed the followig key items: Three years perspective pla & visio of the Compay for global emiece; Aual busiess pla; Ivestmets ad/or loas made by the Compay; Formatio of subsidiary compaies (icludig overseas compaies); Review of operatios (icludig subsidiary compaies); Strategic acquisitios of compaies ad critical assets; Strategic decisios relatig to ew vetures; Statutory matters; Review of compesatio to Directors; New alliaces; Review of miutes of Committee meetigs; Review of Board Meetigs miutes of the subsidiary compaies; Review of foreig exchage exposures; Review of aual budgets, capital budgets ad updates; Review ad adoptio of accouts ad quarterly ad aual fiacial results; Iformatio o recruitmet ad remueratio of seior officers just below the Board level, icludig appoitmet or removal of the Chief Fiacial Officer ad Compay Secretary; Materially importat litigatios, show cause otice, demad, prosecutio, ad pealty otices; Ay material default i fiacial obligatios to ad by us, or substatial opaymet for goods/ services sold/redered by us.; Trasactios that ivolve substatial paymet towards goodwill, brad equity, or itellectual property; Ay sigificat developmet o the huma resources aspect; Sale of material ature, of ivestmets, subsidiaries, assets, which is ot i ormal course of busiess; Details of foreig exchage exposures ad the steps take by maagemet to limit the risks of adverse exchage rate movemet; ad No-compliace of ay regulatory, statutory or listig requiremets ad shareholders service such as opaymet of divided, delay i share trasfer etc. The Compay has laid dow procedures to iform the Board Members about the risk assessmet ad mitigatio procedures. Director s attedace ad their directorship & membership/chairmaship i other compaies The required iformatio as o March 31, 2010 as per Clause 49 of the Listig Agreemet with the Stock Exchages is provided i the followig table: Sr. No. Name of Director 1. Mr. Rajedra S Pawar No. of Directorships i other Idia Compaies* No. of Membership (Chairmaship) i other Board Committees** No of Board Meetigs Held Atteded Whether atteded last AGM 12 5(1) 7 7 Yes 2 Mr. Vijay K 8 4(1) 7 6 Yes Thadai 3. Mr. P Rajedra 9 3(1) 7 6 Yes 4 Mr. Subroto 5 7(3) 7 7 Yes Bhattacharya 5 Mr. Suredra 4 6(1) 7 6 Yes Sigh 6 Mr. Sajay Yes Khosla*** 7 Mr. Shardul S Shroff*** No * Other directorships do ot iclude private compaies, Sectio 25 compaies ad compaies icorporated outside Idia. ** Icludes oly Audit committee ad Shareholders /Ivestors Grievace Committee of public limited compaies. *** Mr. Sajay Khosla ad Mr. Shardul S Shroff had participated i the meetigs through tele-coferece, wherever they could ot atted i perso. Mr. Shroff ceased to be a Director of the Compay w.e.f. May 7, BOARD COMMITTEES I accordace with Clause 49 of the Listig Agreemet with Stock Exchages, the followig Committees are i operatio: Audit Committee Compesatio/Remueratio Committee Shareholders /Ivestors Grievace Committee Audit Committee As a measure of good Corporate Goverace ad to provide assistace to the Board of Directors i fulfillig the Board s oversight resposibilities, a Audit Committee was costituted. Majority of the Members 36

43 CORPORATE GOVERNANCE REPORT (Cotd.) of the Committee are Idepedet Directors ad every Member has rich experiece i the fiacial sector. The Compay Secretary acts as Secretary to the Committee. Statutory Auditors, Iteral Auditors ad Seior Maagemet Persoel of the Compay also atted the meetigs by ivitatio. The recommedatios of the Audit Committee are placed before the Board for its cosideratio ad approval. The Audit Committee comprises of the followig Directors: Chairma : Mr. Subroto Bhattacharya Members : Mr. Vijay K. Thadai ad Mr. Suredra Sigh Fuctios ad Terms of Referece The terms of referece of Audit Committee are as per Listig Agreemet with the Stock Exchages read with Sectio 292A of the Compaies Act, 1956 ad icludes such other fuctios as may be assiged to it by the Board from time to time. The mai fuctios of the Audit Committee, iter-alia, iclude: Supervisio of the Compay s fiacial reportig process ad the disclosure of its fiacial iformatio to esure that the fiacial statemets are correct, sufficiet ad credible; Maagemet Discussio ad Aalysis of fiacial coditio ad results of operatios; Recommedig the appoitmet ad termiatio of Statutory Auditors, fixatio of audit fee ad approval of paymet for ay other services; Reviewig the aual fiacial statemets with the CFO ad the Maagemet before submissio to the Board for approval, with particular referece to: Matters required to be icluded i the Directors Resposibility Statemet formig part of the Directors Report i terms of clause (2AA) of Sectio 217 of the Compaies Act, 1956; Chages, if ay, i accoutig policies ad practices ad ratioale for the same; Sigificat chages, if ay, i the fiacial statemets arisig out of audit fidigs; Compliace with listig ad other legal requiremets relatig to fiacial statemets; Disclosure of ay related party trasactios; ad Qualificatios i the draft audit report, if ay. Reviewig with the Maagemet, the quarterly fiacial statemets before submissio to the Board for approval; Reviewig with the Maagemet, Statutory ad Iteral Auditors, the adequacy of iteral cotrol systems; Reviewig the iteral audit fuctio, icludig the structure of the Iteral Audit Orgaizatio, staffig ad seiority of the official headig the departmet, reportig structure coverage ad frequecy of iteral audit; Discussios with Iteral Auditors, o ay sigificat fidigs ad follow up thereo; Reviewig the fidigs of ay Iteral Audit Report by the Iteral Auditors ito matters cocerig fraud or irregularity or a failure of iteral cotrol systems of a material ature ad reportig the matter to the Board; Discussios with Statutory Auditors, before the audit commeces, about the ature ad scope of the audit as well as havig post-audit discussios to ascertai ay area of cocer; Reviewig the Compay s fiacial ad risk maagemet policies; ad To look ito substatial defaults, if ay, i the paymet to the Shareholders (i case of opaymet of declared divideds), Debetureholders ad creditors. The particulars of the meetigs atteded by the Members of the Audit Committee ad the dates of the meetigs held durig the fiacial year are give below: Name of Members No. of Meetigs Held Atteded Date of Meetigs Mr. Subroto Bhattacharya 5 5 May 1, 2009 Mr. Suredra Sigh 5 5 May 27, 2009 July 29, 2009 Mr. Shardul S Shroff* 5 - October 26, 2009 Jauary 23, 2010 * Mr. Shardul S Shroff ceased to be Member of the Committee w.e.f. May 7, 2010 ad Mr. Vijay K Thadai replaced him as Member of Audit Committee. Compesatio / Remueratio Committee The Compesatio / Remueratio Committee of the Compay is costituted to evaluate remueratio ad beefits for the Executive Directors, to frame policies ad systems for Employees Stock Optio Plas ad to formulate ad admiister the Compay s Employees Stock Optio Plas from time to time. Further the Compesatio/ Remueratio Committee also acts as Nomiatio Committee for iductio of ew directors o the Board of the Compay. 37

44 CORPORATE GOVERNANCE REPORT (Cotd.) The remueratio policy of the Compay is aimed to reward performace, based o review of achievemets o a regular basis. The Compesatio/Remueratio Committee has bee costituted by the Board ad it comprises followig Idepedet Directors: Chairma: Mr. Subroto Bhattacharya Members: Mr. Sajay Khosla ad Mr. Suredra Sigh Fuctios ad Terms of Referece The broad terms of referece of the Compesatio/ Remueratio Committee of the Compay are as follows: To istitute ad guide global employees compesatio ad beefit policies; Directors; compesatio payable to Executive Directors; Employees Stock Optio Plas from time to time; Directors o the Board; ad compositio of the Board ad such other matter related to appoitmet of director. The particulars of the meetigs atteded by the Members of the Compesatio / Remueratio Committee ad the dates of the meetigs held durig the fiacial year are give below : Name of Members No. of Meetigs Held Atteded Date of Meetigs Mr. Subroto Bhattacharya 3 3 May 27, 2009 Mr. Suredra Sigh 3 3 October 26, 2009 Mr. Sajay Khosla* 3 - Jauary 23, 2010 Mr. Shardul S Shroff *# 3 - * Mr. Sajay Khosla ad Mr. Shardul S Shroff had participated i the meetigs through tele-coferece. # Mr. Shardul S Shroff ceased to be Chairma/Member of the Committee w.e.f. May 7, 2010 Remueratio Policy The Compesatio/Remueratio Committee has the powers to determie ad recommed to the Board the amout of remueratio, icludig performace-liked bous ad perquisites, payable to the Maagig Director ad Whole-time Directors. The recommedatios of the Committee are based o the evaluatio of the performace of Maagig Director ad Whole-time Directors o certai parameters, as laid dow by the Board as part of the evaluatio process ad Compay s Rules/Policies. I terms of the guidelies, the Compay esures that the remueratio payable to Executive Director by way of salary icludig other allowaces ad moetary value of perquisites should be withi the overall limit as specified uder the Compaies Act, 1956 ad approved by the Shareholders. Details of Remueratio paid/payable to Maagig Director ad Whole-time Directors for the fiacial year , are give below: Name of Directors Mr. Rajedra S Pawar Mr. Vijay K. Thadai (Amout i Rs.) Mr. P. Rajedra Salary 3,825,000 3,825,000 2,925,000 Perquisites ad allowaces 3,892,772 3,924,470 2,780,668 Cotributio to Providet Fud, Superauatio Fud or Auity Fud 1,288,131 1,287, ,922 Performace- Liked Bous - - 6,000,000 Total 9,005,903 9,036,715 12,684,590 Stock Optios uder ESOP-2005 Nil Nil Nil Notes: 1. Service cotracts of the Executive Directors : Util cessatio i service 2. Notice period of the Executive Directors : Six moths uless otherwise agreed by the Board 3. Severace fee payable to the Executive Directors : Noe uless otherwise agreed by the Board 4. I view of the global recessioary coditios, Executive Directors volutarily waived 25% of their Basic Salary. Remueratio to No-Executive Directors Noe of the No-Executive Directors has ay pecuiary relatioship or trasactios with the Compay, its Promoters, its Directors, its Seior Maagemet, its subsidiary compaies ad associate compaies, except for the followig: 1. Remueratio paid to No-Executive Directors is by way of commissio (based o the et profits of the Compay ad withi the limits approved by the Shareholders) ad sittig fees (for attedig the meetigs of the Board/Committees). 2. Durig the year uder review, the Compay sought legal ad professioal advices o eed basis from M/s Amarchad & Magaldas & Suresh A Shroff & Co., a law firm i which Mr. Shardul S Shroff is a parter, for which a bill of Rs 385,250 was received. The trasactio is ot a material trasactio ad therefore, does ot affect the idepedece of the Director. Details of Remueratio paid/payable to Idepedet 38

45 CORPORATE GOVERNANCE REPORT (Cotd.) Directors for the fiacial year ad other details are give below: Name of Directors Mr. Subroto Bhattacharya Mr. Suredra Sigh Mr. Shardul S Shroff (Amout i Rs.) Mr. Sajay Khosla Commissio 500, , , ,000 Sittig Fees 240, , ,000 No. of shares held i the Compay *No. of Optios grated durig the year. 56,250 56,250 56,250 56,250 69,000 69,000 69,000 69,000 * Durig the year uder review, each Idepedet Directors were issued Optios uder ESOP 2005 havig vestig period of three year (1/3rd Optios will vest i each year) from the date of grat ad exercisable over the period of 3 years from the date of each vestig. The Optios were grated at the market price. Criteria for makig paymet to Idepedet Directors The Idepedet Directors play a importat role i the Goverace of the Compay ad i advisig the Board i critical domais like fiace, marketig, remueratio, plaig ad legal matters. A remueratio i the form of aual commissio is paid to all idepedet Directors. I additio, based o their cotributio of time for Board meetigs ad Committee meetigs, a sittig fee is also paid. Further, based o the performace of the Compay, they become eligible for gettig stock optios of the Compay from time to time. Disclosures regardig re-appoitmet of Directors The resumes of the Directors who are retirig by rotatio ad beig eligible, proposed to be re-appoited are provided i the Notice to the Aual Geeral Meetig. Employees Stock Optio Plas The remueratio policy is directed towards rewardig performace of the employees of the Compay. It is aimed at attractig ad retaiig high caliber talet. The stock optio pla, iter-alia, authorizes the Compay to grat optios which are liked to performace ad achievemet of the Compay s objectives. Details of optios grated uder NIIT Employee Stock Optio Scheme The detail of the optios grated uder NIIT Employee Stock Optio Scheme, 2005 (ESOP-2005) is provided i the Directors Report. Shareholders /Ivestors Grievaces Committee The Shareholders /Ivestors Grievaces Committee was costituted to esure that all commitmet to Shareholders ad Ivestors are met ad thus stregthe their relatioship with the Compay. The compositio of the Shareholders /Ivestors Grievaces Committee is as below: Chairma: Mr. Suredra Sigh Members: Mr. Vijay K. Thadai ad Mr. P. Rajedra Fuctios ad Terms of referece The fuctioig ad broad terms of referece of the Shareholders /Ivestors Grievaces Committee of the Compay are as uder: To review the redressal of complaits received from Shareholders ad Ivestors. To review the importat circulars issued by SEBI/ stock exchages. To review chages i the shareholdig patter. To take ote of the compliace of Corporate Goverace durig the quarter/year. The particulars of the meetigs atteded by the Members of the Shareholders /Ivestors Grievaces Committee ad the dates of the meetigs held durig the fiacial year are give below: Name of Members No. of Meetigs Held Atteded Date of Meetigs Mr. Suredra Sigh 4 4 May 27, 2009 Mr. Vijay K Thadai 4 4 July 29, 2009 October 26, 2009 Mr. P Rajedra 4 4 Jauary 23, 2010 Durig the fiacial year , the Compay has received request/queries/complaits from various Shareholders/Ivestors relatig to o-receipt of declared divided/ bous shares/aual Report, chage of bak accout details, trasfer of shares/ dematerializatio, etc. The same were addressed ad resolved to the satisfactio of the Shareholders/ Ivestors. The break-up of the letters received from the Shareholders/Ivestors are provided elsewhere i this Report. As o March 31, 2010, o request/query/ complait was pedig for redressal. Other Committees costituted by the Board Apart from above committees, the Board has costituted the followig committees of the Directors for efficiet ad quick decisio-makig o the affairs of the Compay: a) The Operatios Committee which approves the opeig/closig of bak accouts, modificatio 39

46 CORPORATE GOVERNANCE REPORT (Cotd.) i operatio of bak accouts, grat of power of attorey/authorisatio, etc. b) The Share Allotmet Committee, which approves allotmet, split, cosolidatio, rematerialisatio ad issue of ew ad duplicate shares. c) The Share Trasfer Committee, which approves the trasfer of shares lodged with the Compay/ Registrar. d) The Debeture Allotmet Committee which approves the matters related to issue ad allotmet of Debetures ad activities related thereto. e) The Borrowig Committee which approves the borrowig upto prescribed limit o behalf of the Compay betwee two Board Meetigs. f) Other specific committees for specified/special purposes like Strategic Ivestmets Committee for strategic ivestmets, etc. CODE OF CONDUCT NIIT s Board has laid dow a Code of Coduct for all Board Members ad Seior Maagemet Persoel of the Compay. The Code of Coduct is available o the Compay s website All Board Members ad Seior Maagemet Persoel have affirmed compliace with the Code of Coduct durig the fiacial year A declaratio siged by the Chief Executive Officer (CEO) to this effect is aexed to this report. CEO AND CFO CERTIFICATION I terms of Clause 49 (V) of the Listig Agreemet, Certificate issued by Chief Executive Officer ad Chief Fiacial Officer cofirmig that the fiacial statemet preset the true ad fair view of the Compay s affairs ad are i compliace with existig accoutig stadards, iteral cotrol ad disclosures is aexed to this report. SUBSIDIARY COMPANIES Clause 49 of the Listig Agreemet defies a material o-listed subsidiary as a ulisted subsidiary compay, icorporated i Idia, whose turover or et worth (i.e. paid up capital ad free reserves) exceeds 20 percet of the cosolidated turover or et worth respectively, of the listed holdig compay ad its subsidiary compaies i the immediately precedig accoutig year. Uder this defiitio, the Compay does ot have a material o-listed Idia subsidiary compay. GENERAL MEETINGS Details of the last three Aual Geeral Meetigs ad the Special Resolutios passed thereat are give as follows: Fiacial Year July 27, A.M July 28, A.M July 25, A.M Date & Time Locatio Special Resolutio(s) FICCI Auditorium Tase Marg, New Delhi FICCI Auditorium Tase Marg, New Delhi FICCI Auditorium Tase Marg, New Delhi No Special Resolutio passed i the AGM No Special Resolutio passed i the AGM Alteratio to the Articles of Associatio of the Compay. Issue of Bous Shares Ehacemet i the Ivestmet ceilig for Foreig Istitutioal Ivestors Revisio of Remueratio payable to Mr. Rajedra S. Pawar, Chairma & Maagig Director. Revisio of Remueratio payable to Mr. Vijay K. Thadai, Whole-time Director. Revisio of Remueratio payable to Mr. P. Rajedra, Whole-time Director. Note: No Extra-ordiary Geeral Meetig held durig the last three years. Postal Ballot Durig the precedig fiacial year, o resolutio was passed through postal ballot. DISCLOSURES a) Related Party Trasactios There is o Related Party Trasactio that may have potetial coflict with the iterest of the Compay at large. The Compay s major Related Party Trasactios are geerally with its subsidiary ad associate compaies. The Related Party Trasactios are etered ito based o the cosideratios of various busiess exigecies ad Compay s log term strategy. All the Trasactios etered durig the fiacial year with Related Parties were o arm legth basis ad the same are reported uder Notes to the Fiacial Statemets. All trasactios covered uder Related Party Trasactios are regularly / periodically ratified ad / or approved by the Board / Audit Committee. For details please refer Note # 21 of Schedule 20 of the Accouts of the Compay. 40

47 CORPORATE GOVERNANCE REPORT (Cotd.) b) Compliace The Compay has complied with the requiremets of the Stock Exchages, SEBI ad Statutory Authorities o all matters related to the capital market durig the last three years. There are o pealties or strictures imposed o the Compay by Stock Exchages or SEBI or ay Statutory Authority(ies) relatig to the above. c) Risk Maagemet The Compay has laid dow procedures to iform the Board Members about the risk assessmet ad miimisatio procedures. The olie risk maagemet system is itroduced through which all the desigated officials submit quarterly reports which is reviewed periodically to esure effective risk maagemet. d) Proceeds from the public issue/right issue/ preferetial issues etc. There was o fresh public issue/right issue/ preferetial issues etc. durig the fiacial year e) Remueratio of Directors The Compay has defied its criteria of makig paymet of remueratio to its No-Executive Directors. The details are stated else where i the report. f) Maagemet discussio ad Aalysis There is a separate part o Maagemet Discussio ad Aalysis i the Aual Report. g) Iter-se relatioships betwee directors There is o iter-se relatioship betwee Directors of the Compay COMPLIANCE OF THE REQUIREMENT OF CLAUSE 49 OF THE LISTING AGREEMENT A. Madatory Requiremets The Compay has complied with all the applicable madatory requiremets of Clause 49 of the Listig Agreemet with the Stock Exchages. B. No-madatory Requiremets The Compay has adopted followig omadatory requiremets of Clause 49 of the Listig Agreemet: a) Remueratio to the Whole-time Directors ad No-Executive Directors: The Compay has defied its criteria of makig paymet of remueratio to its Executive ad No- Executive Directors. b) Shareholders Rights: The Compay seds fiacial statemets alog with Directors report ad Auditors report to all the Shareholders every year. c) Traiig of Board Members: Board Members participate i relevat cofereces ad idustry forums as part of their traiig. d) Mechaism for evaluatig No-Executive Board Members: The key parameters are cotributios to the strategy for growth of the Compay, settig directios for improvemet i goverace ad participatig i the relevat meetigs o a regular basis. e) Whistle Blower Policy: The culture of opeess with easy access to the Seior Maagemet provides a eviromet for easy ad free exchage of ideas ad issues faced by people i the Compay. A formal whistle blower policy is ot i place. Employees may report to the Maagemet cocers about uethical behavior, actual or suspected fraud or violatio of the Compay s Code of Coduct. C. Code for prevetio of Isider -Tradig Practices I compliace with the SEBI s regulatios o prevetio of isider tradig, the Compay has istituted a comprehesive Code of Coduct for its Directors ad Desigated Employees. The Code lays dow guidelies, which advises them o procedures to be followed ad disclosures to be made, while dealig with shares of NIIT ad cautioig them of the cosequeces of violatios. D. Accoutig Treatmet i preparatio of fiacial statemets The Compay has followed the Accoutig Stadards as otified uder Sectio 211(3C) of the Compaies Act, 1956 i preparatio of fiacial statemets ad there has bee o deviatio from the prescribed Accoutig Stadards. E. Statutory Compliace The Compay has a system i place whereby all Busiess Heads/ Uit I-charges gives a 41

48 CORPORATE GOVERNANCE REPORT (Cotd.) Compliace Certificate to the Board of Directors through the Compliace Officer of the Compay relatig to compliace of laws, rules, regulatios ad guidelies applicable to their areas of operatio. The Compay takes appropriate steps after cosultig iterally ad if ecessary, from idepedet legal cousels that the busiess operatios are ot i cotravetio of ay laws. The Compay takes all measures to register ad protect Itellectual Property Rights icludig trade ame / service / trademarks / patets, etc belogig to the Compay. F. Corporate Goverace - Volutary Guidelies 2009 The Miistry of Corporate Affairs has issued the Corporate Goverace - Volutary Guidelies 2009, for volutary adoptio by the Corporate Sector for further improvemet of corporate goverace stadards ad practices. These Guidelies iteds to provide corporate sector a framework to gover themselves volutarily as per the highest stadards of ethical ad resposible coduct of busiess. As a proactive step i this directio, the Compay has authorized Compesatio/ Remueratio Committee to determie ad set the criteria for iductio of ew directors o the Board of the Compay, review the stregth, structure, size ad compositio of the Board ad such other matter related to appoitmet of Directors. The other clauses of the said volutary Guidelies are beig reviewed by the maagemet ad will be implemeted i phased maer. MEANS OF COMMUNICATION a. The quarterly/half yearly/aual results durig the year were published i the leadig atioal Eglish ad Hidi Newspapers ad displayed o the website of the Compay Official ews releases, fiacial results, cosolidated ews releases, fiacial results, cosolidated fiacial highlights ad presetatios are also displayed at the Compay s website. b. The Compay had quarterly Ivestors telecofereces ad press cofereces o May 27, 2009, July 29, 2009, October 26, 2009 ad Jauary 25, 2010 for the Ivestors of the Compay immediately after the declaratio of quarterly/ aual results. I additio, a Aual Ivestor Meet (for istitutioal ivestors) was also orgaized i Mumbai o May 28, c. The maagemet perspective, busiess review ad fiacial highlights are part of the Aual Report. d. The quarterly distributio of shareholdig is also displayed o the Compay s website. e. Aual Reports, Corporate Goverace Report, Quarterly Results, Shareholdig Patter, etc of the Compay were also posted o the SEBI s EDIFAR website from time to time. SHAREHOLDERS INFORMATION a Compay Registratio Details The Compay is registered i the Natioal Capital Territory of Delhi. The Corporate Idetity Number (CIN) allotted to the Compay by the Miistry of Corporate Affairs (MCA) is L74899DL1981PLC b. Aual Geeral Meetig Date : Friday, July 9, 2010 Time : A.M. Veue : Parklad Exotica, Khasra No. 123, Chattarpur Madir Road, Satbari, New Delhi Book Closure Dates: July 2, 2010 to July 9, 2010 (both days iclusive) c. Fiacial Year : April 1 to March 31 Fiacial Caledar (tetative ad subject to chage): d. Divided I view of our cofidece i the future, the Board of Directors have recommeded a divided of Rs per equity share of Rs. 2 each, subject to approval of the Shareholders at the esuig Aual Geeral Meetig. The divided shall be paid to the Shareholders withi 30 days from the date of approval at the Aual Geeral Meetig ad as per the provisios of the Compaies Act, The divided, if declared, would be paid to such shareholders whose ames appear i the Register of Members as o July 9, 2010, holdig shares i physical form. I respect of shares held i 42

49 CORPORATE GOVERNANCE REPORT (Cotd.) electroic mode, the divided will be paid o the basis of list of beeficial owers as furished by Natioal Securities Depository Limited (NSDL) ad Cetral Depository Services (Idia) Limited (CDSL) as at the ed of the busiess hours o July 1, e. Register ECS Madate ad furish correct bak accout particulars with the Compay / Depository Participat Ivestors should provide a ECS madate to the Compay i case of shares held i physical form ad esure that the correct ad updated particulars of their bak accout are available with the Depository Participat (DP) i case of shares held i demat form. This would facilitate i receivig direct credits of divideds, refuds etc, from the Compay ad avoidig postal delays ad loss i trasit. f. Uclaimed / Upaid Divided All uclaimed / upaid divided due for the fiacial year eded upto September 30, 2002 have bee trasferred to the Ivestor Educatio ad Protectio Fud of the Cetral Govermet pursuat to Sectio 205A of the Compaies Act, The Shareholders are requested to apply for revalidatio / issue of demad drafts for the divided for the fiacial year October 1, 2002 to March 31, 2004 o or before August 25, 2011 after which ay upaid divided amout for the fiacial year will be trasferred by the Compay to Ivestors Educatio ad Protectio Fud (IEPF) ad o claim shall lie agaist the Compay or IEPF after the said trasfer. The Shareholders are also requested to apply for revalidatio / issue of demad drafts for the uclaimed / upaid fractioal share paymet payable o accout of demerger scheme o or before October 12, 2011 after which ay upaid fractioal amout related to demerger will be trasferred by the Compay to IEPF ad o claim shall lie agaist the Compay or IEPF after the said trasfer. g. Nomiatio Facility The Compaies (Amedmet) Act, 1999, has provided for a omiatio facility to the Shareholders of the Compay. The Compay is pleased to offer the facility of omiatio to Shareholders ad Shareholders may avail this facility by sedig the duly completed Form 2B to the Registered Office of the Compay/ Registrar ad Trasfer Aget of the Compay i case the shareholdig is i physical form. The shareholders ca obtai a copy of Form 2B from the Registered Office of the Compay or ca be dowloaded from the website of the Compay at com. I case of demat holdigs the request is to be submitted to the Depository Participat. h. Listig of Equity Shares ad Debetures The Equity Shares of the Compay are listed at the Natioal Stock Exchage of Idia Limited (NSE), Mumbai ad Bombay Stock Exchage Limited (BSE), Mumbai. The listig fees for the fiacial year have bee paid to the Stock Exchages. Durig the year, the Compay received the Delistig approval from the Calcutta Stock Exchage Limited uder the Volutary Delistig of equity shares uder SEBI (Delistig of Securities) Guidelies, The Debetures issued by the Compay o private placemet basis are listed at the NSE. The listig fees for the fiacial year have bee paid to NSE. i. Compliace Certificate of the Auditors j. Details of last three Aual Geeral Meetigs ad Book Closure dates: k. Stock Code l. Stock Market Data The mothly high ad low share prices ad market capitalisatio of Equity Shares of the Compay traded o BSE ad NSE from April 1, 2009 to March 31, 2010 ad the compariso of share 43

50 CORPORATE GOVERNANCE REPORT (Cotd.) prices of the Compay vis-à-vis the Sesex ad Nifty Idices are give below: Share Price Movemet durig the year April 1, 2009 to March 31, 2010 Shareholdig Patter as o March 31, 2010 * Market capitalizatio at closig price of the moth Source : BSE & NSE website. Shareholdig Distributio as o March 31,

51 CORPORATE GOVERNANCE REPORT (Cotd.) m. Details of requests/queries/complaits received ad resolved durig the fiacial year : held i multiple folios. This would facilitate oestop trackig of all corporate beefits o the shares ad would reduce time ad efforts required to moitor multiple folios. q. Liquidity of Shares The shares of the Compay are traded elctroically o the NSE ad BSE. The Compay s shares cotiued to be part of BSE- 500 Idex ad BSE- TECk Idex of BSE. There was o request/query/complait pedig at the begiig of the year. Durig the fiacial year, the Compay atteded most of the Shareholders / Ivestors requests / queries / complaits withi 7 days from the date of receipt. The exceptios have bee for cases costraied by procedural issue or disputes / legal impedimets etc. There is o request/query/complait pedig at the ed of the fiacial year.. Outstadig GDRs/ADRs/Warrats or ay Covertible istrumets, coversio date ad likely impact o equity As o date there are o outstadig warrats / bods/ other istrumets (except Stock Optios grated uder NIIT ESOP 2005, the details of which are give i Directors Report) which are covertible ito equity shares. o. Dematerialisatio of Shares ad Liquidity The Shares of the Compay are compulsorily traded i dematerialised form. The Compay has arragemets with both the Natioal Securities Depositories Limited (NSDL) ad Cetral Depository Services (Idia) Limited (CDSL) to establish electroic coectivity of its shares for scripless tradig. As o March 31, 2010, percet of the shares of the Compay were held i a dematerialised form. p. Cosolidate Multiple Folios Ivestors should cosolidate their shareholdig r. Share Trasfer System The Compay has appoited a commo Registrar for the physical share trasfer ad dematerialisatio of shares. The shares lodged for physical trasfer/ trasmissio/ traspositio are registered ormally withi a period of fortight, if the documets are complete i all respects. For this purpose, the Share Trasfer Committee meets as ofte as required. Durig the period uder review, the Committee met 19 times. Adequate care is take to esure that o trasfers are pedig for more tha a fortight. Requests for demat/remat were cofirmed mostly withi a fortight. The Compay obtais from a Compay Secretary i Practice half-yearly certificates of compliace with the share trasfer formalities as required uder Clause 47(c) of the Listig Agreemet with Stock Exchages ad files a copy of the certificate with the Stock Exchages. s. Permaet Accout Number for trasfer of shares i physical form SEBI vide its Circular dated May 20, 2009 has stated that for securities market trasactios ad off-market trasactios ivolvig trasfer of shares i physical form of listed compaies, it shall be madatory for the trasferee(s) to furish copy of PAN card to the Compay s RTA for registratio of such trasfer of shares. Accordigly, shareholders are requested to please furish copy of PAN card to the Compay s RTA for registratio of trasfer of shares i their ame. t. Compliace Officer Mr. Parvee Jai, Compay Secretary ad Legal Cousel is the Compliace Officer of the Compay. u. Desigated exclusive -id : The Compay has desigated a -id ivestors@iit.com exclusively for Shareholders ad Ivestors servicig. 45

52 CORPORATE GOVERNANCE REPORT (Cotd.) v. Registrar for Dematerialisatio ad Physical Trasfer of Shares The Compay has appoited a Registrar for dematerialisatio (Electroic Mode) ad physical trasfer of shares whose detail is give below:- Alakit Assigmets Limited Uit: 2E/21, Jhadewala Extesio, New Delhi Phoe Nos. : , Fax Nos. : rta@alakit.com w. Registered Office:, B-234, Okhla Idustrial Area, Phase I, New Delhi x. Address for Correspodece The Shareholders may address their commuicatio/ suggestios/ grievaces /queries relatig to the shares of the Compay to: Ivestors Services B-234, Okhla Idustrial Area, Phase I, New Delhi Tel Nos. : Fax : ivestors@iit.com The Corporate Goverace Report was adopted by the Board of Directors at their meetig held o May 7, CERTIFICATES UNDER CORPORATE GOVERNANCE REPORT A. Declaratio regardig compliace with the Code of Coduct by Board Members ad Seior Maagemet Persoel pursuat to Clause 49(1)(D)(ii) of the Listig Agreemet This is to certify that as per Clause 49 of the Listig Agreemet: 1. The Code of Coduct has bee laid dow for all the Board Members ad Seior Maagemet ad other employees of the Compay. 2. The Code of Coduct has bee posted o the website of the Compay. 3. The Board Members ad Seior Maagemet Persoel have affirmed compliace with the Compay s Code of Coduct for the year Place : New Delhi Dated : May 7, 2010 Vijay K. Thadai CEO ad Whole-time Director 46

53 CORPORATE GOVERNANCE REPORT (Cotd.) B. Certificate by Chief Executive Officer ad Chief Fiacial Officer o compliace with the coditios of Corporate Goverace uder Clause 49 of the Listig Agreemet To, The Board of Directors, B-234 Okhla Idustrial Area, Phase-I New Delhi We hereby certify that for the fiacial year : 1. We have reviewed the fiacial statemets ad the cash flow statemet ad that to the best of our kowledge ad belief: (a) These statemets do ot cotai ay materially utrue statemet or omit ay material fact or cotai statemets that might be misleadig; (b) These statemets together preset a true ad fair view of the Compay s affairs ad are i compliace with existig Accoutig Stadards, applicable laws ad regulatios. 2. There are, to the best of our kowledge ad belief, o trasactios etered ito by the Compay durig the year which are fraudulet, illegal or violate the Compay s Code of Coduct. 3. We accept resposibility for establishig ad maitaiig iteral cotrols for fiacial reportig ad that we have evaluated the effectiveess of the iteral cotrol systems of the Compay pertaiig to fiacial reportig ad we have disclosed to the Auditors ad the Audit Committee those deficiecies, if ay, of which we are aware, i the desig or operatio of the iteral cotrol systems ad the steps we have take or propose to take to rectify these deficiecies. 4. We have idicated to the auditors ad the Audit Committee: sigificat chages, if ay, i iteral cotrol over fiacial reportig durig this year; sigificat chages, if ay, i accoutig policies durig this year ad that the same have bee disclosed i the otes to the fiacial statemets; ad istaces of sigificat fraud of which we are aware ad the ivolvemet therei, if ay, of the maagemet or a employee havig a sigificat role i the Compay s iteral cotrol system over fiacial reportig. Place : New Delhi Vijay K. Thadai Jiteder Mahaja Dated : May 7, 2010 CEO ad Whole-time Director Chief Fiacial Officer 47

54 CORPORATE GOVERNANCE REPORT (Cotd.) Auditors Certificate regardig compliace of coditios of Corporate Goverace To the Members of We have examied the compliace of coditios of Corporate Goverace by, for the year eded March 31, 2010, as stipulated i Clause 49 of the Listig Agreemets of the said Compay with stock exchages i Idia. The compliace of coditios of Corporate Goverace is the resposibility of the Compay s maagemet. Our examiatio was carried out i accordace with the Guidace Note o Certificatio of Corporate Goverace (as stipulated i Clause 49 of the Listig Agreemet), issued by the Istitute of Chartered Accoutats of Idia ad was limited to procedures ad implemetatio thereof, adopted by the Compay for esurig the compliace of the coditios of Corporate Goverace. It is either a audit or a expressio of opiio o the fiacial statemets of the Compay. I our opiio ad to the best of our iformatio ad accordig to the explaatios give to us, We cofirm that the Compay has complied with the coditios of Corporate Goverace as stipulated i the above metioed Listig Agreemets. We state that such compliace is either a assurace as to the future viability of the Compay or the efficiecy or effectiveess with which the maagemet has coducted the affairs of the Compay. For Price Waterhouse Firm Registratio Number : E Chartered Accoutats H. Sigh Place : New Delhi Parter Date : May 7, 2010 Membership No. F

55 AUDITORS REPORT TO THE MEMBERS OF NIIT LIMITED 1. We have audited the attached Balace Sheet of (the Compay ) as at March 31, 2010, ad the related Profit ad Loss Accout ad Cash Flow Statemet for the year eded o that date aexed thereto, which we have siged uder referece to this report. These fiacial statemets are the resposibility of the Compay s Maagemet. Our resposibility is to express a opiio o these fiacial statemets based o our audit. 2. We coducted our audit i accordace with the auditig stadards geerally accepted i Idia. Those Stadards require that we pla ad perform the audit to obtai reasoable assurace about whether the fiacial statemets are free of material misstatemet. A audit icludes examiig, o a test basis, evidece supportig the amouts ad disclosures i the fiacial statemets. A audit also icludes assessig the accoutig priciples used ad sigificat estimates made by Maagemet, as well as evaluatig the overall fiacial statemet presetatio. We believe that our audit provides a reasoable basis for our opiio. 3. As required by the Compaies (Auditor s Report) Order, 2003, as ameded by the Compaies (Auditor s Report) (Amedmet) Order, 2004 (together the Order ) issued by the Cetral Govermet of Idia i terms of sub-sectio (4A) of Sectio 227 of The Compaies Act, 1956 of Idia (the Act ) ad o the basis of such checks of the books ad records of the Compay as we cosidered appropriate ad accordig to the iformatio ad explaatios give to us, we further report that: (i) (a) The Compay is maitaiig proper records showig full particulars, icludig quatitative details ad situatio, of fixed assets. (b) The fixed assets are physically verified by the Maagemet accordig to a phased programme desiged to cover all the items over a period of two years which, i our opiio, is reasoable havig regard to the size of the Compay ad the ature of its assets. Pursuat to the programme, a portio of the fixed assets has bee physically verified by the Maagemet durig the year ad o material discrepacies betwee the book records ad the physical ivetory have bee oticed. (c) I our opiio ad accordig to the iformatio ad explaatios give to us, a substatial part of fixed assets has ot bee disposed off by the Compay durig the year. (ii) (a) The ivetory has bee physically verified by the Maagemet durig the year. I our opiio, the frequecy of verificatio is reasoable. (b) I our opiio, the procedures of physical verificatio of ivetory followed by the Maagemet are reasoable ad adequate i relatio to the size of the Compay ad the ature of its busiess. (c) O the basis of our examiatio of the ivetory records, i our opiio, the Compay is maitaiig proper records of ivetory. The discrepacies oticed o physical verificatio of ivetory as compared to book records were ot material. (iii) (a) The Compay has grated usecured loas, to four subsidiaries covered i the register maitaied uder Sectio 301 of the Act. The maximum amout ivolved durig the year ad the year-ed balace of such loas aggregates to Rs. 4,810 lacs ad Rs. 1,297 lacs respectively. I our opiio, the rate of iterest ad other terms ad coditios of such loas are ot prima facie prejudicial to the iterest of the Compay. I respect of the aforesaid loas, the parties are repayig the pricipal amouts as stipulated ad are also regular i paymet of iterest, where applicable. I respect of the aforesaid loas, there is o overdue amout more tha Rupees Oe Lac. (b) The Compay has take usecured loas, from oe wholly owed subsidiary covered i the register maitaied uder Sectio 301 of the Act. The maximum amout ivolved durig the year ad the year-ed balace of such loa is the same i.e. Rs. 1,236 lacs. I our opiio, the rate of iterest ad other terms ad coditios of such loas are ot prima facie prejudicial to the iterest of the Compay. I respect of the aforesaid loas, the Compay is regular i repayig the pricipal amouts as stipulated ad is also regular i paymet of iterest, where applicable. 49

56 AUDITORS REPORT (Cotd.) (iv) I our opiio ad accordig to the iformatio ad explaatios give to us, havig regard to the explaatio that certai items purchased are of special ature for which suitable alterative sources do ot exist for obtaiig comparative quotatios, there is a adequate iteral cotrol system commesurate with the size of the Compay ad the ature of its busiess for the purchase of ivetory, fixed assets ad for the sale of goods ad services. Further, o the basis of our examiatio of the books ad records of the Compay, ad accordig to the iformatio ad explaatios give to us, we have either come across or have bee iformed of ay cotiuig failure to correct major weakesses i the aforesaid iteral cotrol system. (v) (a) I our opiio ad accordig to the iformatio ad explaatios give to us, the particulars of cotracts or arragemets referred to i Sectio 301 of the Act have bee etered i the register required to be maitaied uder that sectio. (b) I respect of certai trasactios of the value of Rs. 15, lacs with subsidiaries ad Rs lacs with other compaies, the maagemet has iformed us that the trasactios dealt are of a special ature ad therefore comparable prices are ot available. I our opiio ad accordig to the iformatio ad explaatios give to us, the trasactios made i pursuace of such cotracts or arragemets ad exceedig the value of Rupees Five Lacs i respect of ay party durig the year have bee made at prices which are reasoable havig regard to the prevailig market prices at the relevat time. (vi) The Compay has ot accepted ay deposits from the public withi the meaig of Sectios 58A ad 58AA of the Act ad the rules framed there uder. (vii) I our opiio, the Compay has a iteral audit system commesurate with its size ad ature of its busiess. (viii) The Cetral Govermet of Idia has ot prescribed the maiteace of cost records uder clause (d) of sub-sectio (1) of Sectio 209 of the Act for ay of the products of the Compay. (ix) (a) Accordig to the iformatio ad explaatios give to us ad the records of the Compay examied by us, i our opiio, the Compay is geerally regular i depositig the udisputed statutory dues icludig providet fud, ivestor educatio ad protectio fud, employees state isurace, icometax, sales-tax, wealth tax, service tax, customs duty ad other material statutory dues as applicable with the appropriate authorities. (b) Accordig to the iformatio ad explaatios give to us ad the records of the Compay examied by us, the particulars of dues of icome-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty ad cess as at March 31, 2010 which have ot bee deposited o accout of a dispute, are as follows: (x) (xi) (xii) Name of the statute Nature of dues Amout (Rs. Lacs) Adhra Pradesh Demad for Geeral Sales Tax works cotract Act, 1957 tax Period to which the Forum where the dispute amout relates is pedig High Court of Adhra Pradesh March 2010 Fiace Act, 1994 Service Tax Customs, Excise ad Service Tax Appellate Tribual Icome Tax Act, 1961 Icome Tax Icome Tax Appellate Tribual The Compay has o accumulated losses as at March 31, 2010 ad it has ot icurred ay cash losses i the fiacial year eded o that date or i the immediately precedig fiacial year. Accordig to the records of the Compay examied by us ad the iformatio ad explaatio give to us, the Compay has ot defaulted i repaymet of dues to ay fiacial istitutio or bak or debeture holders as at the balace sheet date. The Compay has ot grated ay loas ad advaces o the basis of security by way of pledge of shares, debetures ad other securities. 50

57 AUDITORS REPORT (Cotd.) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) The provisios of ay special statute applicable to chit fud/ idhi/ mutual beefit fud/ societies are ot applicable to the Compay. I our opiio, the Compay is ot a dealer or trader i shares, securities, debetures ad other ivestmets. Durig the year, the Compay has provided a Letter of Credit of Rs. 1,124 lacs (USD 2.5 millio), guaratee of Rs. 6,826 lacs (GBP 10 millio) ad a security of Rs 170 lacs to baks for loas availed by its subsidiaries. As these are for loas availed by its subsidiaries, these are ot cosidered prejudicial to the iterest of the Compay. I our opiio, ad accordig to the iformatio ad explaatios give to us, o a overall basis, the term loas have bee applied for the purposes for which they were obtaied. O the basis of a overall examiatio of the balace sheet of the Compay, i our opiio ad accordig to the iformatio ad explaatios give to us, there are o fuds raised o a short-term basis which have bee used for log-term ivestmet. The Compay has ot made ay preferetial allotmet of shares to parties ad compaies covered i the register maitaied uder Sectio 301 of the Act durig the year. The Compay has created security or charge i respect of debetures issued ad outstadig at the year-ed. The Compay has ot raised ay moey by public issues durig the year. Durig the course of our examiatio of the books ad records of the Compay, carried out i accordace with the geerally accepted auditig practices i Idia, ad accordig to the iformatio ad explaatios give to us, we have either come across ay istace of fraud o or by the Compay, oticed or reported durig the year, or have we bee iformed of such case by the Maagemet. 4. Further to our commets i paragraph 3 above, we report that: (a) We have obtaied all the iformatio ad explaatios which, to the best of our kowledge ad belief, were ecessary for the purposes of our audit; (b) I our opiio, proper books of accout as required by law have bee kept by the Compay so far as appears from our examiatio of those books; (c) The Balace Sheet, Profit ad Loss Accout ad Cash Flow Statemet dealt with by this report are i agreemet with the books of accout; (d) I our opiio, the Balace Sheet, Profit ad Loss Accout ad Cash Flow Statemet dealt with by this report comply with the accoutig stadards referred to i sub-sectio (3C) of Sectio 211 of the Act; (e) O the basis of writte represetatios received from the directors, as o March 31, 2010 ad take o record by the Board of Directors, oe of the directors is disqualified as o March 31, 2010 from beig appoited as a director i terms of clause (g) of sub-sectio (1) of Sectio 274 of the Act; (f) I our opiio ad to the best of our iformatio ad accordig to the explaatios give to us, the said fiacial statemets together with the otes thereo ad attached thereto give, i the prescribed maer, the iformatio required by the Act, ad give a true ad fair view i coformity with the accoutig priciples geerally accepted i Idia: (i) i the case of the Balace Sheet, of the state of affairs of the compay as at March 31, 2010; (ii) i the case of the Profit ad Loss Accout, of the profit for the year eded o that date; ad (iii) i the case of the Cash Flow Statemet, of the cash flows for the year eded o that date. For Price Waterhouse Firm Registratio No. : E Chartered Accoutats H. Sigh Place : New Delhi Parter Date : May 7, 2010 Membership No. F

58 BALANCE SHEET as at March 31, 2010 Schedule No./ As At As At (Note Referece) March 31, 2010 March 31, 2009 SOURCES OF FUNDS SHAREHOLDERS FUNDS Share Capital `1 330,197, ,971,972 Employees Stock Optio Outstadig `1A - 679,662 Reserves ad Surplus `2 3,609,790,465 3,939,987,659 3,517,359,612 3,848,011,246 `20(30) 1,431,621 - LOAN FUNDS Secured Loas `3 1,065,541,682 1,265,872,569 Usecured Loas `4 1,440,389,825 2,505,931, ,861,326 1,986,733,895 6,447,350,787 5,834,745,141 APPLICATION OF FUNDS FIXED ASSETS `5 Gross Block 3,897,354,942 3,408,363,345 Less: Depreciatio 2,076,893,196 1,631,714,037 Net Block 1,820,461,746 1,776,649,308 Capital work-i-progress `20(27) 79,436, ,774,614 (icludig Capital Advaces) INVESTMENTS `6 2,012,160,343 1,847,973,464 DEFERRED TAX ASSETS (Net) `20(30) - 62,343,202 CURRENT ASSETS, LOANS AND ADVANCES Ivetories `7 101,330,727 92,420,202 Sudry Debtors `8 2,169,738,886 1,785,636,415 Cash ad Bak Balaces `9 288,683, ,295,919 Other Curret Assets `10 687,107, ,549,047 Loas ad Advaces `11 1,212,297,512 1,510,187,960 4,459,158,656 4,074,089,543 Less : CURRENT LIABILITIES AND PROVISIONS Curret Liabilities `12 1,588,148,641 1,747,514,530 Provisios `13 335,717, ,570,460 1,923,866,176 2,102,084,990 Net Curret Assets 2,535,292,480 1,972,004,553 6,447,350,787 5,834,745,141 NOTES TO ACCOUNTS `20 The Schedules referred to above form a itegral part of the Balace Sheet. This is the Balace Sheet referred to i our report of eve date. For Price Waterhouse Rajedra S Pawar Vijay K Thadai Firm Registratio No. : E Chartered Accoutats Chairma ad Maagig Director DIN CEO & Whole-time Director DIN H. Sigh Parter Ashok Arora Group Chief Fiacial Officer Jiteder Mahaja Chief Fiacial Officer Parvee Jai Compay Secretary Membership No. F & Legal Cousel Place : New Delhi Date : May 7,

59 PROFIT AND LOSS ACCOUNT for the year eded March 31, 2010 Schedule No./ Year eded Year eded (Note Referece) March 31, 2010 March 31, 2009 INCOME Reveue from Operatios `20 [1(v),10(a),11ad 18] 6,251,721,044 5,456,168,674 Other Icome `14 196,036, ,102,252 6,447,757,142 5,795,270,926 EXPENDITURE Persoel `15 1,174,176,184 1,311,384,086 Developmet, Productio ad Executio`16 2,589,508,988 1,894,983,974 Admiistratio ad Others `17 959,808, ,006,379 Marketig `18 562,888, ,005,873 Iterest ad Fiace Charges `19 171,127, ,289,916 Depreciatio ad Amortisatio `5 541,792, ,413,434 5,999,303,288 5,160,083,662 Profit before Tax 448,453, ,187,264 Tax Expese `20(30) - Curret 102,095,361 90,732,143 - Deferred charge/ (credit) 45,994,357 47,947,757 - Frige Beefit Tax - 24,401,409 Provisio for tax relatig to earlier years/ (credit) (11,332,198) - Profit after Tax 311,696, ,105,955 Balace brought forward from Previous year 2,359,717,257 2,224,508,572 Balace available for appropriatio 2,671,413,591 2,696,614,527 APPROPRIATION Divided : - Proposed Divided o Equity Shares 231,133, ,477,882 - Corporate Divided Tax o above `20(28) 25,975,979 23,145,300 Trasferred to Geeral Reserve 31,169,633 47,210,596 Trasferred to Debeture Redemptio Reserve 202,063,492 52,063,492 Balace Carried to Balace Sheet 2,181,070,651 2,359,717,257 2,671,413,591 2,696,614,527 Earigs per share `20 [1(xiv), (32)] - Basic Diluted NOTES TO ACCOUNTS `20 The Schedules referred to above form a itegral part of the Profit ad Loss Accout. This is the Profit ad Loss Accout referred to i our report of eve date. For Price Waterhouse Rajedra S Pawar Vijay K Thadai Firm Registratio No. : E Chartered Accoutats Chairma ad Maagig Director DIN CEO & Whole-time Director DIN H. Sigh Ashok Arora Jiteder Mahaja Parvee Jai Parter Group Chief Fiacial Officer Chief Fiacial Officer Compay Secretary Membership No. F & Legal Cousel Place : New Delhi Date : May 7,

60 CASH FLOW STATEMENT for the year eded March 31, 2010 Year eded Year eded March 31, 2010 March 31, 2009 A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax 448,453, ,187,264 Add/ (Less): Depreciatio ad Amortisatio 541,792, ,413,434 Provisio for Doubtful Debts 53,850,405 39,514,540 Provisio for Doubtful Advaces 458, ,400 Provisio for slow/ o-movig Ivetory 3,000,000 11,584,957 Ivetory writte off 1,264,705 6,825,437 Advaces writte off 3,003,807 2,116,456 Foreig Exchage Adjustmets 74,079,137 (66,133,180) Iterest Expeses 258,122, ,703,760 Iterest Icome (110,784,789) (77,599,613) Divided Icome (78,289,000) (78,289,000) 7,602,658 (94,233,896) Profit o sale of Ivestmet (312,783) (6,811,068) Liabilities writte back (8,288,332) (10,283,506) Provisio for Gratuity & Compesated Abseces (Net)/ (Credit) (38,339,558) 11,939,683 Employees Stock Optio Expeses/ (Credit) (85,025) 707,074, ,132,404 Trade Receivables (457,405,299) (544,782,690) Ivetories (13,175,230) 393,326 Other Curret Assets (413,852,209) (133,686,827) Loas ad Advaces (18,188,489) (30,574,283) Curret Liabilities ad Provisios (128,696,898) (1,031,318,125) 415,365,281 (293,285,193) Direct Tax -(Paid)/ Refud received (icludig TDS) (111,293,562) (126,118,463) B. CASH FLOW FROM INVESTING ACTIVITIES (386,259,418) (1,271,646,834) Proceeds from sale of Fixed Assets 2,518, ,547,083 Proceeds from sale of Capital work-i-progress - 108,238,413 Loa give to Subsidiaries (37,910,000) (421,900,000) Loa give to Subsidiaries received back 347,640,000 43,800,000 Loa give to Others (189,000,000) (179,500,000) Loa give to Others received back 185,000,000 57,000,000 Iterest received 124,078,506 64,303,803 Divided received 78,289, ,290,000 Purchase of Mutual Fuds (250,000,000) (250,000,000) Sale of Mutual Fuds 250,197, ,311,068 Proceeds from disposal of Ivestmets i Associates 115,000 6,500,000 Ivestmet i Equity Shares i Subsidiary Compaies (164,186,879) (63,000,000) ) 54

61 CASH FLOW STATEMENT for the year eded March 31, 2010 (Cotd.) Year eded Year eded March 31, 2010 March 31, 2009 C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Shares (icludig Share Premium) 2,962,014 6,722,952 Issue of No Covertible Debetures 600,000,000 1,000,000,000 Short term Loa from Baks: - Raised durig the year 200,000, ,000,000 - Repaid durig the year (700,000,000) - Short term Loa raised from Others 500,000,000 - Vehicle Loa repaid durig the year (5,161,344) (10,014,956) Term Loa repaid durig the year (122,916,662) (163,888,891) Repaymet of Loas to Baks - Workig Capital - (40,061,100) Repaymet of Loas to Baks - Cash Credit (72,252,881) (89,618,862) Iterest paid o Fixed Loa (256,426,282) (149,163,738) (icludig fiace charges o fiace lease arragemet) Divided paid (icludig Divided Tax) (236,616,367) (218,538,200) Receipt of Loas 98,000,000 96,500,000 Repaymet of Loas (91,600,000) (220,300,000) (84,011,522) 811,637,205 (110,611,927) (24,503,250) 399,295, ,799, ,683, ,295,919 Cash ad Cash Equivalets comprise 92,271, ,013,161 Balace with Scheduled Baks * 196,412, ,282, ,683, ,295,919 Notes : 1 The above Cash Flow Statemet has bee prepared uder the idirect method as set out i Accoutig Stadard 3 - Cash Flow Statemets as otified uder sectio 211 (3C) of the Compaies Act, The Schedules from 1-20 form a itegral part of the Cash Flow Statemet. 3 Previous year figures, to the extet feasible, have bee regrouped/ recasted wherever ecessary to coform to the Curret year s classificatio. For Price Waterhouse Rajedra S Pawar Vijay K Thadai Firm Registratio No. : E Chairma ad Maagig Director CEO & Whole-time Director Chartered Accoutats DIN DIN H. Sigh Ashok Arora Jiteder Mahaja Parvee Jai Parter Group Chief Fiacial Officer Chief Fiacial Officer Compay Secretary Membership No. F & Legal Cousel Place : New Delhi Date : May 7,

62 SCHEDULES aexed to ad formig part of the Balace Sheet as at March 31, 2010 Schedule As At As At No. March 31, 2010 March 31, SHARE CAPITAL (Refer Note 16 o Schedule 20) Authorised 250,000,000 Equity Shares of Rs. 2/- each 500,000, ,000,000 (Previous year 250,000,000 Equity Shares of Rs. 2/- each) 2,500,000 Redeemable Preferece Shares 250,000, ,000,000 of Rs.100/- each 750,000, ,000,000 Issued 165,101,597 Equity Shares of Rs. 2/- each 330,203, ,977,972 (Previous year - 164,988,986 Equity Shares of Rs. 2/- each) 330,203, ,977,972 Subscribed 165,095,597 Equity Shares of Rs. 2/- each 330,191, ,965,972 (Previous year - 164,982,986 Equity Shares of Rs. 2/- each) 330,191, ,965,972 Paid-up 165,095,597 Equity Shares of Rs. 2/- each 330,191, ,965,972 (Previous year - 164,982,986 Equity Shares of Rs. 2/- each) Add: Forfeited Shares (amout origially paid-up) 6,000 6,000 Note : Issued Share Capital icludes 142,176,960 Equity Shares of Rs. 2/- each (Previous year 142,176,960 Equity Shares of Rs. 2/- each) allotted as fully Paid-up Bous Shares by way of capitalisatio of Geeral Reserve/ Share Premium Accout/ Capital Redemptio Reserve i , , , ad ,197, ,971,972 1A. EMPLOYEES STOCK OPTION OUTSTANDING (Refer Notes 1(vii) ad 16 o Schedule 20) Employees Stock Optio Outstadig - 679, ,662 56

63 Schedule As At As At No. March 31, 2010 March 31, RESERVES AND SURPLUS Share Premium (Refer Note 16 o Schedule 20) As per Last Balace Sheet 514,383, ,160,493 Add: Additios durig the year o accout of exercise of ESOP s 3,313, ,696,964 8,222, ,383,038 Geeral Reserve As per Last Balace Sheet 625,726, ,515,637 Add : Trasfer from Profit ad Loss Accout 31,169, ,895,866 47,210, ,726,233 Debeture Redemptio Reserve As per Last Balace Sheet 52,063,492 - Add: Trasfer from Profit ad Loss Accout 202,063, ,126,984 52,063,492 52,063,492 Hedgig Reserve Accout (Debit balace) (Refer Notes1(ix) ad 10 o Schedule 20) Hedgig Reserve - (52,310,874) Deferred Tax Asset o Hedgig Reserve ,780,466 (34,530,408) Profit ad Loss Accout 2,181,070,651 2,359,717,257 3,609,790,465 3,517,359,612 57

64 Schedule As At As At No. March 31, 2010 March 31, SECURED LOANS [Refer Note 6 o Schedule 20] Loas from Baks - Rupee Term Loas* - 122,916,662 - Cash Credit 64,131, ,384,748 - Vehicle Loas* 1,409,815 65,541,682 6,571, ,872,569 * (Amout due withi oe year Rs.1,409,815/- (Previous year Rs 127,967,144/-)) No Covertible Debetures (Refer Notes below) 1,000,000,000 1,000,000,000 1,065,541,682 1,265,872,569 Notes: (i) 12% No Covertible Debetures to Life Isurace Corporatio of Idia amoutig to Rs. 500,000,000/- are redeemable at par as follows: Redemptio Date Value to be redeemed 20th October ,666,667 20th October ,666,667 20th October ,666, ,000,000 (ii) 11.25% No Covertible Debetures to Idia Overseas Bak amoutig to Rs. 500,000,000/- are redeemable at par as follows: Redemptio Date Value to be redeemed 17th March ,000,000 17th March ,000,000 17th March ,000, ,000, UNSECURED LOANS [Refer Notes 1 (x) ad 33(b) o Schedule 20] Log Term Loa from Subsidiaries 123,600, ,200,000 [Amout due withi oe year Nil (Previous year Nil)] Deferred Lease Obligatio 116,789,825 3,661,326 [Amout due withi oe year Rs.19,195,999/- (Previous year Rs.3,365,768/-)] Short Term Loas - From Baks 100,000, ,000,000 - From Others 500,000,000 - Short Term No Covertible Debetures (Refer Note below) 600,000,000-1,440,389, ,861,326 Note: No Covertible Debetures held by Fortis Mutual Fud as o March 31, 2010 amoutig to Rs. 600,000,000/- are redeemable at par o July 2,

65 59

66 Schedule As At As At No. March 31, 2010 March 31, INVESTMENTS [Refer Notes 1 (iii), 20, 22, 25 ad 26 o Schedule 20] A. LONG TERM, TRADE [UNQUOTED] I Subsidiary Compaies - Equity 24,162,113 (Previous year 24,162,113) Shares of 1 US $ each fully paid-up i 1,083,566,259 1,083,566,259 NIIT (USA) Ic., USA Less: Provisio for dimiutio i value of Ivestmet (398,415,709) 685,150,550 (398,415,709) 685,150, ,000 (Previous year 500,000) Equity Shares of 1 US $ or Rp. 2,297 each 17,560,000 17,560,000 fully paid-up i PT NIIT Idoesia, Idoesia Less: Provisio for dimiutio i value of ivestmet (17,560,000) - (17,560,000) - 35,056,000 (Previous year 35,056,000) Equity Shares of 1 US $ each fully paidup 1,628,688,400 1,628,688,400 i NIIT Atilles NV, Netherlads Atilles Less: Provisio for dimiutio i value of Ivestmet (773,531,096) 855,157,304 (773,531,096) 855,157,304 3,949,175 (Previous year 3,949,175) Equity Shares of Re 1/- each 3,949,175 3,949,175 fully paid-up i NIIT Olie Learig Limited Less: Provisio for dimiutio i value of Ivestmet (3,949,175) - (3,949,175) - 1,000,000 (Previous year 900,000) Equity Shares of Rs. 10/- each fully paid-up i 10,500,000 9,000,000 Hole-i-the-Wall Educatio Limited 9,910,000 (Previous year 9,910,000) Equity Shares of Rs. 10/- each fully paidup i Scatech Evaluatio Services Limited 99,064,000 99,064,000 10,250,000 (Previous year 7,350,000) Equity Shares of Rs. 10/- each fully paidup i NIIT Multimedia Limited 102,500,000 73,500, ,000 (Previous year 155,000) Equity Shares of 1 GBP each fully paid-up i 13,101,328 13,101,328, UK 8,050,000 (Previous year 4,000,000 ) Equity Shares of Rs. 10/- each fully paidup i NIIT Istitute of Fiace Bakig ad Isurace Traiig Limited 80,500,000 40,000, ,471 (Previous year 503,691) Equity Shares of Rs. 10/- each Fully Paid-up i Evolv Services Limited 46,187,061 28,000, ,000,000 45,000,000 - Preferece 5,600,000 (Previous year 5,600,000 ) No Covertible Cumulative Redeemable Preferece Shares of Rs.10/- each fully paid-up i Hole-i-the-Wall Educatio Limited I Other Compaies Nil (Previous year 190,627) Equity Shares of Rs 10/- each fully paid-up i Aesthetic Techologies Private Limited - 20,000,584 Less: Provisio for dimiutio i value of Ivestmet - - (20,000,584) - B. LONG TERM, OTHERS [UNQUOTED] I Other Compaies 240 Equity Shares of Rs.10/- each fully paid-up i 2,400 2,400 Hiduja HCL Sigtel Commuicatio Private Limited Less: Provisio for dimiutio i value of Ivestmet (2,400) - (2,400) - 2,012,160,343 1,847,973,464 60

67 Schedule As At As At No. March 31, 2010 March 31, INVENTORIES (Fiished Goods) [Refer Notes 1(iv) ad 18 o Schedule 20] Educatio ad Traiig Material * 99,575,690 89,050,728 Software ** 1,755,037 3,369, ,330,727 92,420,202 Notes: * Net of provisio for o-movig ivetories of Rs. 5,300,000/- (Previous year Rs. 2,300,000/-). ** Net of provisio for o-movig ivetories of Nil (Previous year Rs. 12,436,982/-). 8. SUNDRY DEBTORS (Usecured) [Refer Note 31 o Schedule 20] Outstadig for over six moths - Cosidered Good 812,852, ,233,647 - Cosidered Doubtful 172,227, ,376,380 Other Debts - Cosidered Good 1,356,886, ,402,768 2,341,966,506 2,054,012,795 Less : Provisio for Doubtful Debts 172,227,620 2,169,738, ,376,380 1,785,636,415 2,169,738,886 1,785,636, CASH AND BANK BALANCES Cash ad Cheques i Had 92,271, ,013,161 Balaces with Scheduled Baks i : - Curret Accouts 149,625,365 80,502,550 - Divided Accout 4,961,032 3,954,217 - Fixed Deposit Accouts 41,060,354 38,030,317 [Iclude Rs. 41,060,354/- (Previous year Rs. 38,030,317/-) pledged as margi moey] - Exchage Earers Foreig Currecy Accout 765, , OTHER CURRENT ASSETS (Usecured, cosidered good) [Refer Note 1(v) o Schedule 20] 288,683, ,295,919 Iterest Receivable 1,019,837 14,313,554 Ubilled Reveue (Net) 686,087, ,235, ,107, ,549,047 61

68 Schedule As At As At No. March 31, 2010 March 31, LOANS AND ADVANCES (Usecured, cosidered good except where otherwise stated) [Refer Notes 1(xii), 23, 24 ad 30 o Schedule 20] Loa to Subsidiaries 129,662, ,791,520 Loa to NIIT Educatio Society 3,500,000 3,500,000 Loa to NIIT Istitute of Iformatio Techology 440,300, ,300,000 Recoverable from Subsidiaries 120,903, ,244,582 Advaces recoverable i cash or i kid or for value to be received * - Cosidered good 130,780, ,800,135 - Cosidered doubtful 5,949,495 7,088, ,729, ,888,848 Less : Provisio for Doubtful Advaces 5,949, ,780,204 7,088, ,800,135 * Icludes amout due from Directors or Other Officers Nil (Previous year Nil) Maximum amout due from Directors or Other Officers durig the year Rs.961,952/- (Previous year Rs. 3,220,607/-). Security Deposits - Cosidered good 331,155, ,086,186 - Cosidered doubtful 5,047,157 6,186, ,202, ,272,361 Less : Provisio for Doubtful Security Deposits 5,047, ,155,708 6,186, ,086,186 Advace paymet of Frige Beefit Tax 88,113,046 88,113,046 Less : Provisio for Frige Beefit Tax (87,396,232) 716,814 (87,396,232) 716,814 Advace paymet of Icome Tax 632,861, ,567,959 Less: Provisio for Curret Tax (577,582,399) 55,279,122 (486,819,236) 34,748,723 1,212,297,512 1,510,187,960 62

69 Schedule As At As At No. March 31, 2010 March 31, CURRENT LIABILITIES [Refer Notes 1(ix), 10 ad 34 o Schedule 20] Sudry Creditors - Due to Mirco Eterprises ad Small Eterprises 1,007,635 11,706 - Due to Others 1,030,061,206 1,170,661,056 Amout Payable to Subsidiaries 20,520,204 35,850,035 Advaces from Customers 405,717, ,738,842 Security Deposits 1,910,215 5,921,715 Iterest accrued but ot due o loas 16,050,766 14,354,760 Upaid Divided* 4,961,032 3,954,217 Uclaimed fractioal share paymet 234, ,652 Deferred Reveue 35,491,005 15,581,098 Other Liabilities 72,194,040 97,893,575 Derivative Istrumet Fair Value Liability - 52,310,874 *There are o amouts due for paymet to the Ivestor Protectio Fud uder sectio 205C of the Compaies Act, 1956 as at the year ed. 13. PROVISIONS [Refer Notes 1(vi), (xii), 17 ad 28 o Schedule 20] 1,588,148,641 1,747,514,530 Provisio for Compesated Abseces 77,501, ,094,326 Provisio for Gratuity 1,106,580 5,852,952 Proposed Divided o Equity Shares 231,133, ,477,882 Corporate Divided Tax 25,975,979 23,145, ,717, ,570,460 63

70 Schedule Year eded Year eded No. March 31, 2010 March 31, OTHER INCOME [Refer Notes 1(v),(viii), (ix), 10(b), 20, 22, 28 ad 36 o Schedule 20] Profit o sale of - Short term Ivestmets -others 197, ,068 - Fixed Assets (Net) - 197,783 94,233,896 94,544,964 Profit o sale of log term - trade ivestmets 115,000 6,500,000 Provisios/ Other Liabilities writte back 8,288,332 10,283,506 Recoveries from Overseas Subsidiaries for expeses 85,574,116 82,759,963 Gai o exchage fluctuatios (Net) - 44,653,709 Divided Icome from Subsidiary 78,289,000 78,289,000 Miscellaeous 23,571,867 22,071, PERSONNEL [Refer Notes 1(vi), (vii),5,8,16,17,19 ad 27 o Schedule 20] 196,036, ,102,252 Salaries ad Beefits 1,138,918,577 1,257,556,696 [Icludes cotributio towards Providet ad Other Fuds Rs. 50,494,861/- (Previous year Rs. 59,733,924/-)] Employees Stock Optio write back (85,025) - Welfare ad Other Expeses 35,342,632 53,827, DEVELOPMENT, PRODUCTION AND EXECUTION [Refer Notes 8,9,12,13,18,27 ad 33(a) o Schedule 20] 1,174,176,184 1,311,384,086 Courseware ad Mauals 671,085, ,643,263 [Icludes ivetory write off/ provisio for Rs. 4,264,705/- (Previous year Rs. 9,125,437/-)] Bought out Packages/ Products 763,964, ,141,538 [Icludes ivetory write off/ provisio Nil (Previous year Rs. 9,284,957/-)] Course Executio Charges 753,821, ,392,397 Professioal Charges 309,983, ,024,556 Equipmet Hirig 30,692,727 34,720,378 Cosumables 4,667,562 5,142,729 Freight ad Cartage 54,014,917 54,868,166 Others 1,278,877 50,947 2,589,508,988 1,894,983,974 64

71 Schedule Year eded Year eded No. March 31, 2010 March 31, ADMINISTRATION AND OTHERS [Refer Notes 1(viii), (ix), 5, 8, 10, 13, 15, 27, 31 ad 33(a) o Schedule 20] Ret 281,440, ,366,201 Rates ad Taxes 2,917,946 1,049,720 Electricity ad Water 88,915, ,233,124 Commuicatio 73,507,313 77,850,673 Legal ad Professioal 76,503,480 80,470,459 Travellig ad Coveyace 173,690, ,662,421 Isurace Premium 8,413,073 7,522,792 Repairs ad Maiteace: - Plat ad Machiery 14,403,738 14,949,715 - Buildigs 2,512,415 2,484,016 - Others 39,303,348 39,269,873 Provisio for Doubtful Debts 53,850,405 39,514,540 Provisio for Doubtful Advaces 458, ,400 Advaces writte off 3,003,807 2,116,456 Loss o Exchage Fluctuatios (Net) 42,770,998 - Expeses o Equipmet Hirig 12,097,807 9,738,190 Security ad Admiistratio Services 33,984,891 35,851,705 Loss o sale/ disposal of Fixed Assets (Net) 7,602,658 - Sudry Expeses 44,431,027 26,542, MARKETING [Refer Note 5 o Schedule 20] 959,808, ,006,379 Advertisemet ad Publicity 531,823, ,321,560 Discout 60, ,556 Others 31,005,262 28,546, INTEREST AND FINANCE CHARGES [Refer Notes 1(x), (xi), 7, 11 ad 33(b) o Schedule 20] 562,888, ,005,873 Bak, Discoutig ad Other Fiacial Charges 23,790,395 24,185,769 Iterest Expeses: - Fixed Loas 65,214,796 91,376,489 - No Covertible Debetures 150,805,069 31,160,959 - Others 42,102, ,122,288 39,166, ,703,760 Less: Iterest Earigs (Gross) : - Deposits (2,927,002) (2,386,555) - Loas (100,559,510) (75,212,038) - Others (7,298,277) (110,784,789) (1,020) (77,599,613) 171,127, ,289,916 65

72 SCHEDULE 20 : Notes to Accouts for the year eded March 31, STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES These fiacial statemets are prepared o a accrual basis, uder historical cost covetio ad i compliace i all material aspects with the applicable accoutig priciples i Idia, the applicable accoutig stadards otified uder sectio 211(3C) of the Compaies Act, 1956 ad the relevat provisios of the Compaies Act, The sigificat accoutig policies adopted by the Compay are detailed below: i) Fixed Assets, Depreciatio ad Amortisatio Fixed Assets are stated at acquisitio cost except where they are take over pursuat to a acquisitio at a cosolidated price. Idividual fixed assets take over pursuat to acquisitio are recorded at their fair value o the date of acquisitio based o valuatio carried out by idepedet valuers. Expeses icurred o iteral developmet of educatioal cotet ad products are capitalised either idividually or as a kowledge bak i the form of software, oce their techical feasibility ad ability to geerate future ecoomic beefits is established i accordace with the requiremets of Accoutig Stadard 26, Itagible Assets as otified uder sectio 211(3C) of the Compaies Act, Expeses icurred durig the research phase till the establishmet of commercial feasibility is charged to the Profit ad Loss Accout. Depreciatio ad amortisatio is provided o a pro-rata basis o the straight-lie method over the estimated useful lives of the assets determied as follows: Buildigs Plat ad Machiery icludig: - Computers, Priters ad related accessories - Office Equipmets ad Electroic Equipmets - Air Coditioers Furiture, Fixtures & Electric Fittigs Leasehold Improvemets Assets uder employee beefits scheme except vehicles Assets acquired uder lease (Icluded uder Plat & Machiery ad Furiture & Fixtures) Itagible Assets icludig: - Acquired ad Iterally Geerated (Computer Software, Educatioal Cotet ad Products) - Patets All other assets (icludig vehicles) 58 years 2-5 years 8 years 10 years 7-10 years 3-5 years or lease period, whichever is lower 3 years Lease Period 3-5 years 3-5 years Rates prescribed uder Schedule XIV to the Compaies Act, 1956 Fixed Assets purchased for utilisatio i implemetig certai cotractual obligatios with the customers uder a project are depreciated over the period of the cotract. Further, educatioal cotet, computer system ad software are techically evaluated each year for their useful ecoomic life ad the uamortised depreciable amout of the asset is charged to Profit ad Loss Accout as depreciatio/ amortisatio over their revised remaiig useful life. ii) Impairmet of Assets All assets other tha ivetories, ivestmets ad deferred tax asset, are reviewed for impairmet, wherever evets or chages i circumstaces idicate that the carryig amout may ot be recoverable. Assets whose carryig value exceeds their recoverable amout are writte dow to the recoverable amout. 66

73 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) iii) Ivestmets Log-term ivestmets are valued at their acquisitio cost. Ay declie i the value of the said ivestmet, other tha a temporary declie, is recogised ad charged to Profit ad Loss Accout. Short-term ivestmets are carried at cost or market value, whichever is lower. iv) Ivetory Valuatio Fiished Goods Ivetories are valued at lower of cost or et realisable value. Cost is determied usig weighted average method ad icludes applicable costs icurred i brigig ivetories to their preset locatio ad coditio. v) Reveue Recogitio The reveue i respect of sale of courseware, techical iformatio ad referece material ad other goods are recogised o dispatch/ delivery of the material to the customer whereas the reveue from the tuitio activity/ traiig is recogised over the period of the course programmes or as per the terms of agreemet, as the case may be. The reveue from time ad material cotracts is recogised o a ma moth basis. I respect of fixed price cotracts, icludig certai cotracts requirig sigificat usage of cotets capitalized as educatio software relatig to courseware ad products (Itellectual Property Rights), reveue is recogised based o the techical evaluatio of utilisatio of courseware ad products ad as per the proportioate completio method. The foreseeable losses o completio of cotract, if ay, are provided for. The Compay udertakes fixed price projects for supply/ istallatio/maiteace of techology equipmet & ifrastructure set-up, providig educatioal product ad educatioal services. Reveue from iitial project set up activities & developmet of products uder such cotracts is recogised uder proportioate completio method. The reveue i such cotracts from sale of techology equipmets is recogised o delivery of the techology equipmet whe substatial risks ad rewards of owership i such techology equipmet pass to the customer based o cotractual terms of the respective cotracts ad i respect of techology equipmets, which are ot sold, the reveue from the same alog with the reveue from educatioal services is recogised over the cotracted period of service. Deferred Reveue represets uamortised amouts billed to customers i advace for products, services or subscriptios. Divided icome is recogised whe the right to receive divided is established. Iterest icome is recogised o accrual basis. I respect of sale ad lease back trasactios, reveue is recogised o delivery of the product. Gai o sale o such trasactios is recogised i the Profit ad Loss Accout over the lease period of the respective product. vi) Employee Beefits Gratuity NIIT provides for gratuity, a defied beefit retiremet pla (the Gratuity Pla ) coverig eligible employees i accordace with the Paymet of Gratuity Act, The Gratuity Pla provides a lump sum paymet to vested employees at retiremet, death, icapacitatio or termiatio of employmet, of a amout based o the respective employee s salary ad the teure of employmet. Compay s liability is actuarially determied at the ed of the year ad ay shortfall i the fud size maitaied by the Trust set up by the Compay with Life Isurace Corporatio of Idia is additioally provided for. Actuarial gais if ay are recogised i the Profit ad Loss Accout ad disclosed as a asset i the Balace Sheet. Compesated Abseces Liability i respect of compesated abseces is provided both for ecashable leave ad those expected to be availed. The Compay has defied beefit plas for compesated abseces for employees, the liability for which is determied o the basis of a actuarial valuatio at the ed of the year. Ay gai or loss arisig out of such valuatio is recogised i the Profit ad Loss Accout. 67

74 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) Superauatio The Compay makes defied cotributio to the Trust established for the purpose by the Compay towards superauatio fud maitaied with Life Isurace Corporatio of Idia. Cotributio made durig the year is charged to Profit ad Loss Accout. Providet Fud The Compay makes cotributio to the NIIT LIMITED EMPLOYEES PROVIDENT FUND TRUST, which is a defied beefit pla to the extet that the Compay has a obligatio to make good the shortfall, if ay, betwee the retur from the ivestmets of the trust ad the otified iterest rate. The Compay s obligatio i this regard is actuarially determied ad provided for if the circumstaces idicate that the Trust may ot be able to geerate adequate returs to cover the iterest rates otified by the Govermet. The Compay s cotributio towards Providet Fud is charged to Profit ad Loss Accout. Pesio Fud The Compay makes defied cotributio to a govermet admiistered pesio fud o behalf of its employees. The Compay s cotributio towards Employee Pesio Scheme is charged to Profit ad Loss Accout. vii) Employees Stock Optio Pla (ESOP) Equity settled stock optios grated uder NIIT Employee Stock Optio Pla 2005 are accouted for as per the accoutig treatmet prescribed by Employee Stock Optio Scheme ad Employee Stock Purchase Guidelies, 1999, issued by Securities ad Exchage Board of Idia, whereby the itrisic value of the optio beig excess of market value of the uderlyig share immediately prior to date of grat over its exercise price is recogised as deferred employee compesatio with a credit to employee stock optio outstadig accout. The deferred employee compesatio is charged to Profit ad Loss Accout o straight lie basis over the vestig period of the optio. The optios that lapse are reversed by a credit to employee compesatio expese, equal to the amortised portio of value of lapsed portio ad credit to deferred employee compesatio expese equal to the u-amortized portio. The balace i employee stock optio outstadig accout, et of ay u-amortised deferred employee compesatio, is show separately as part of Shareholders Fuds. viii) Foreig Currecy Trasactios Trasactios i foreig currecy are booked at stadard rates determied periodically which approximates the actual rates, ad all moetary assets ad liabilities i foreig currecy is restated at the ed of accoutig year. Gai/Loss arisig out of fluctuatios o realisatio/ paymet or restatemet is charged/ credited to the Profit ad Loss Accout. Foreig currecy assets/ liabilities covered by forward cotracts are stated at the forward cotract rate ad differece betwee the forward rate ad the exchage rate at the iceptio of the forward cotract are recogised to the Profit ad Loss Accout over the life of the cotract, except to the extet o which accoutig policy o derivative istrumets ad hedge accoutig as detailed i (ix) below ad further explaied i ote 10 below. ix) Derivative Istrumets ad Hedge Accoutig I accordace with its Risk maagemet policies ad procedures, the compay uses derivative istrumets such as foreig currecy forward cotracts to hedge its risks associated with foreig currecy fluctuatios relatig to certai firm commitmets ad highly probable forecasted trasactios. The derivatives that qualify for hedge accoutig ad desigated as cash flow hedges are iitially measured at fair value ad are remeasured at a subsequet reportig date ad the chages i the fair value of the derivatives i.e. gai or loss (et of tax impact) is recogised directly i Shareholders Fuds uder hedgig reserve to the extet cosidered highly effective. Gai or loss o derivative istrumets that either does ot qualify for hedge accoutig or ot desigated as cash flow hedges or desigated cash flow hedges to the extet cosidered ieffective are recogised i the Profit ad Loss Accout. 68

75 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) Hedge accoutig is discotiued whe the hedgig istrumet expires, sold, termiated, exercised or o loger qualifies for hedge accoutig. The cumulative gai or loss o the hedgig istrumet recogised i Shareholders Fuds uder hedgig reserve is retaied there util the forecasted trasactio occurs subsequet to which the same is adjusted agaist the related trasactio i the Profit ad Loss Accout. If a hedged trasactio is o loger expected to occur, the et cumulative gai or loss recogised i Shareholders Fuds is trasferred to Profit ad Loss Accout i the same period. x) Leases The Compay has take assets, vehicles as well as premises o lease. Lease retal i respect of operatig lease arragemets are charged to expese o a straight lie basis as per the terms of the related agreemet. Fiace lease trasactios are cosidered as fiacig arragemets i accordace with Accoutig Stadard 19 ad the leased asset is capitalised at a amout equal to the preset value of future lease paymets ad a correspodig amout is recogised as a liability. The lease paymets made are apportioed betwee fiace charge ad reductio of outstadig liability i relatio to the leased asset. xi) Borrowig Cost Borrowig costs are recogised i the Profit ad Loss Accout for the period i which they are icurred except where the cost is icurred durig the costructio of a asset that takes a substatial period to get ready for its iteded use, i which case, it is capitalised. xii) Taxatio Tax expese, comprisig of both curret tax ad deferred tax is icluded i determiig the et results for the year. Deferred Tax reflects the effect of timig differeces betwee the assets ad liabilities recogised for fiacial reportig purposes ad the amouts that are recogised for curret tax purposes. As a matter of prudece deferred tax assets are recogised ad carried forward oly to the extet, there is reasoable/ virtual certaity that sufficiet future taxable icome will be available agaist which such deferred tax assets ca be realised. Curret Tax is determied based o the provisios of Icome Tax Act, Miimum Alterate Tax (MAT) paid i excess of ormal icome tax is recogised as asset (MAT Credit etitlemet) oly to the extet, there is reasoable certaity that compay shall be liable to pay tax as per the ormal provisios of the Act i future. MAT Credit is utilised i the year whe ormal icome tax is higher tha the Miimum Alterate Tax (MAT). xiii) Provisios ad Cotigecies The Compay creates a provisio whe there is preset obligatio as a result of a past evet that probably requires a outflow of resources ad a reliable estimate ca be made of the amout of obligatio. A disclosure for a cotiget liability is made whe there is a possible obligatio or a preset obligatio that probably will ot require a outflow of resources or where a reliable estimate of the obligatio caot be made. Disclosure of show cause otices are made o merits of the matters where maagemet foresees possibilities of outflow of resources. xiv) Earigs Per Share The earigs cosidered i ascertaiig the Compay s Earigs Per Share ( EPS ) comprises the Net Profit after Tax. The umber of shares used i computig the Basic EPS is the weighted average umber of shares outstadig durig the year. The Diluted EPS is calculated o the same basis as basic EPS, after adjustig for the effects of potetial Dilutive Equity Shares. 2. CONTINGENT LIABILITIES i. Guaratees issued by bakers outstadig at the ed of accoutig year Rs. 125,486,322/- (Previous year Rs. 4,362,745/-). 69

76 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) ii. Corporate Guaratees Nil (Previous year Rs. 150,000,000/-) give o behalf of NIITia Welfare Trust for loa availed by Trust. iii. Corporate Guaratee Rs. 944,470,800/- [USD 21 millio (et of paymet of USD 22.5 millio)] give to ICICI Bak, Bahrai o behalf of NIIT (USA) Ic. (Previous year Rs. 1,678,426,200/- [USD 33 millio (et of paymet of USD 10.5 millio)]). iv. Corporate Guaratee Rs. 682,552,000/- [GBP 10 millio (loa outstadig GBP 9.40 millio)] (Previous year Nil) give to ICICI Bak UK PLC o behalf of NIIT (USA) Ic. v. Stad by Letter of Credit of Rs. 247,361,400/- [USD 5.50 millio] (Previous year Rs. 152,584,200/- [USD 3 millio]) from BNP Paribas i favor of Bak of West, USA o behalf of Elemet K Corporatio, USA. vi. Security give to Idia Overseas Bak agaist Workig Capital limits o behalf of Evolv Services Limited of Rs. 10,000,000/- (Previous year Rs. 10,000,000/-) [Amout outstadig at year ed Rs. 9,472,172/- (Previous year Rs. 8,496,824/-)], NIIT Istitute of Fiace Bakig ad Isurace Traiig Limited of Rs.10,000,000/- (Previous year Nil) [Amout Outstadig at year ed Nil] ad Hole-i-the-Wall Educatio Limited of Rs.7,000,000/- (Previous year Nil) [Amout Outstadig at year ed Rs. 6,443,889/-]. vii. Claims agaist the Compay ot ackowledged as debts Rs. 13,200,000/- (Previous year Rs. 14,900,000/-). viii. Adhra Pradesh works cotract tax demad Rs. 80,137,287/- (Previous year Rs. 74,601,827/-). Maagemet does ot foresee ay fiacial implicatio based o the advice of the legal cosultat. ix. Service Tax demad amoutig to Rs Lacs (Previous year Rs Lacs) ad equal amout of pealty i.e. Rs Lacs (Previous year Rs Lacs) raised by Commissioer of Service Tax, Delhi. Maagemet does ot foresee ay fiacial implicatio based o the advice of the legal cosultat. x. Icome Tax demad for Rs. 721 Lacs for Assessmet year Maagemet does ot foresee ay fiacial implicatio based o the advice of the legal cosultat. 3. Durig the last quarter of curret fiacial year eded March 31, 2010, the Compay has received Show Cause Notices u/s 263 of the Icome Tax Act, 1961 issued by the Commissioer of Icome Tax for the Assessmet years to ,who later issued Orders directig the Assessig Officer for reassessmet o certai items. The quatum of Icome Tax demad, if ay, has either bee quatified or ascertaied ad thus, idetermiable at this stage. These orders have bee challeged by the Compay i the Icome Tax Appellate Tribual. Based o legal opiio, the Compay is cofidet that appeals so filed shall be decided i its favour. 4. Estimated amout of cotracts remaiig to be executed o capital accout (et of advaces) ot provided for Rs. 15,804,313/- (Previous year Rs. 208,865,610/-). 5. Certai commo resources are shared by the Compay ad NIIT Techologies Limited ( NTL ). This resulted i the Compay recoverig Rs. 3,856,927/- (Previous year Rs. 8,835,659/-) from NTL ad NTL recoverig Rs. 9,598,975/- (Previous year Rs. 10,860,791/- ) from the Compay which have bee icluded/ etted off agaist relevat head i the Profit ad Loss Accout viz., Persoel, Admiistratio & Others ad Marketig expeses. 6. DETAILS OF SECURITY GIVEN AGAINST LOANS i). Workig Capital Limits of the Compay ad sub-limits of certai subsidiaries are secured by hypothecatio of stocks ad book debts of the Compay. The Compay ad the subsidiaries have utilised the cash credit (fud-based) limits to the extet of Rs. 64,131,867/- (Previous year Rs. 136,384,748/-) ad Rs. 15,916,061/- (Previous year Rs. 8,496,824/-) respectively as at year ed. ii). 12% No Covertible Debetures issued to Life Isurace Corporatio of Idia ad 11.25% No Covertible Debetures issued to Idia Overseas Bak are secured by way of first charge o pari-passu basis o the immovable ad movable fixed assets of the Compay. The Compay had maitaied 100% asset cover sufficiet to discharge the pricipal amout at all times durig the fiacial year for these debetures. 70

77 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) iii). Vehicle loas from baks are secured by way of hypothecatio of the vehicles fiaced. 7. Iterest received is gross of tax deducted at source of Rs. 13,902,514/- (Previous year Rs. 16,078,179/-). 8. Expeses durig the year are et of recoveries towards commo services from domestic subsidiaries amoutig to Rs. 14,635,499/- (Previous year Rs. 28,828,253/-). 9. The Course Executio Charges iclude paymets to licesees, busiess parters, chael parters ad other agecies for executio of educatio ad traiig busiess. Course Executio Charges iclude Nil (Previous year Rs. 45 Lacs) pertaiig to previous years. 10. DERIVATIVE INSTRUMENTS a. The followig table summarises the movemet i desigated forward covers: Particulars Desigated Forward Covers (USD M) FY Desigated Forward Covers (USD M) FY Opeig Balace as at begiig of the year Additios durig the Curret year Matured durig the year Closig Balace as at ed of the year Durig the Curret year, loss of Rs Lacs (Previous year Rs. 823 Lacs) has bee debited to Reveue accout o maturity of the desigated forward covers ad Nil (Previous year Rs. 523 Lacs) have bee debited to Hedgig Reserve Accout o the desigated forward covers outstadig as at the year ed. b. Mark to Market gai/ (loss) o udesigated forward covers amoutig to Rs Lacs [Previous year Rs. (524) Lacs] has bee recogised as gai/ (loss) o exchage fluctuatio i the Profit ad Loss Accout. 11. EARNINGS IN FOREIGN CURRENCY Particulars Year eded March 31, 2010 Year eded March 31, 2009 Export of services & products 474,805, ,158,772 Iterest (Net of Taxes) 25,189,578 20,318,997 Recovery of expeses from Overseas Subsidiaries 85,574,116 82,759, CIF VALUE OF IMPORTS Particulars Year eded March 31, 2010 Year eded March 31, 2009 Bought out packages/ products 226,755, ,602,756 Capital goods 13,031,888 53,105,948 71

78 SCHEDULE 20 : Notes to Accouts for the year eded March 31, 2010 (Cotd.) 13. EXPENDITURE IN FOREIGN CURRENCY (Net of taxes) Particulars Year eded March 31, 2010 Year eded March 31, 2009 Productio, developmet ad executio 110,120, ,314,981 Travel 25,820,649 42,100,577 Professioal fee 2,682,005 1,417,555 Others 12,695,887 8,866, DIVIDEND REMITTED IN FOREIGN CURRENCY Particulars Year eded March 31, 2010 Year eded March 31, 2009 Number of No-residets to whom divided is paid (Nos.) 3 - Number of Shares held by No-residets (Nos.) 78,750 - Amout remitted 102,375 - Year to which the divided related (Fiacial year) PAYMENT TO AUDITORS Particulars Year eded March 31, 2010 Year eded March 31, 2009 Statutory Audit fee 4,860,000 4,860,000 Tax Audit fee 470, ,000 Others 2,285,000 2,460,000 Reimbursemet of expeses (icludig Service Tax) 1,298,722 1,327, EMPLOYEES STOCK OPTION SCHEME Durig the year , the Compay had established NIIT Employee Stock Optio Pla 2005 ESOP 2005 ad the same was approved at the Geeral Meetig of the Compay held o May 18, The pla was set up so as to offer ad grat, for the beefit of employees (excludig promoters) of the Compay, who are eligible uder Securities ad Exchage Board of Idia (SEBI) (Employee Stock Optio Scheme ad Employee Stock Purchase Scheme) Guidelies, 1999, optios of the Compay i aggregate up to 1,925,000 optios uder ESOP 2005, i oe or more traches, ad o such terms ad coditios as may be fixed or determied by the Board, i accordace with the provisios of law or guidelies issued by the relevat authorities i this regard. As per the pla, each optio is exercisable for oe equity share of face value of Rs. 2/- each (Rs. 10/- each pre bous ad split) fully paid up o paymet to the Compay, for such shares, at a price to be determied i accordace with ESOP ESOP iformatio is give for the umber of shares after sub-divisio ad Bous issue. 72

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