CMC Annual Report 2007 08

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ContentsCorporate Information 2

Notice 3

Directors’ Report 7

Management Discussion and Analysis 16

Corporate Governance Report 22

Secretarial Auditors’ Certificate on Corporate Governance 31

Auditors’ Report 32

Balance Sheet 36

Profit and Loss Account 37

Cash Flow Statement 38

Schedules forming part of the Balance Sheet 39

Schedules forming part of the Profit and Loss Account 43

Notes on Balance Sheet & Profit and Loss Account 44

Balance Sheet Abstract and Company’s General Business Profile 55

Statement under Section 212(8) of the Companies Act, 1956 56related to Subsidiary Company

Auditors’ Report on the Consolidated Financial Statements 57

Consolidated Balance Sheet 58

Consolidated Profit and Loss Account 59

Consolidated Cash Flow Statement 60

Schedules forming part of the Consolidated Balance Sheet 61

Schedules forming part of the Consolidated Profit and Loss Account 64

Notes to the Consolidated Financial Statements 66

CMC LimitedThirty second annual report 2007 - 2008

Annual General Meeting will be held on Tuesday, June 24, 2008 at Bhartiya Vidya Bhavan Auditorium, Basheerbagh,Hyderabad, at 3.30 p.m. As a measure of economy, copies of the Annual Report will not be distributed at the AnnualGeneral Meeting. Members are requested to kindly bring their copies to the meeting.

Visit us at www.cmcltd.com

CMC Limited

Thirty second annual report 2007 - 2008

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CORPORATE INFORMATION

Board of DirectorsMr S Ramadorai (Chairman)Mr R Ramanan (Managing Director & CEO)Mr Ishaat HussainDr KRS MurthyMr Surendra SinghMr C B Bhave (upto 14-02-08)Mr Shardul ShroffMs Kalpana Morparia (from 11-03-08)

Management TeamMr R Ramanan (Managing Director & CEO)Mr J K Gupta (CFO)Mr Prashant K Shukla, (COO)Mr Vivek Agarwal (Company Secretary & Head – Legal)Mr Prasad Rangnekar (Global Head, Emerging Technologies)Mr Prabhat Mittra (Global Head, CS & ITES)Mr Uday Bhobe (Global Head - SI)Mr Saibal Ghosh (Global Head, E&T & National Sales Head)Mr Dilip Madhav Pai, (CIO)Mr S V Ramanan (Head HR & Corporate Communications)

Statutory AuditorsM/s S.B. Billimoria & Co.Chartered Accountants

Secretarial AuditorsM/s Chandrasekaran AssociatesCompany Secretaries

Internal AuditorsM/s Ernst & Young Pvt. Ltd

Registered OfficeCMC CentreOld Mumbai HighwayGachibowli, Hyderabad-500032Tel. : 040-66578000 (10 lines)Fax : 040-23000509

Corporate OfficePTI Building, 5th Floor4, Sansad MargNew Delhi-110001Tel. : 011-23736151-8 (8 lines)Fax : 011-23736159

Principal BankersCanara BankState Bank of Bikaner & JaipurICICI Bank

Board Committees

Audit CommitteeDr KRS MurthyMr S RamadoraiMr Surendra Singh

Share Transfer-cum-ShareholdersGrievance CommitteeMr Surendra SinghMr R RamananMr Shardul ShroffMr Vivek Agarwal

Remuneration CommitteeDr KRS MurthyMr S RamadoraiMr Surendra Singh

Executive CommitteeMr S RamadoraiMr R RamananMr Ishaat HussainDr KRS MurthyMs Kalpana Morparia

Nomination CommitteeMr Surendra SinghMr S RamadoraiMr R RamananMr Shardul Shroff

Ethics & Compliance CommitteeMr Surendra SinghMr R RamananMr Shardul ShroffMr Vivek Agarwal

Registrars & Share Transfer AgentsM/s Karvy Computershare Private LimitedKarvy House, 46, Avenue 4, Street No 1Banjara Hills, Hyderabad - 500 034

Stock Exchanges where Company’sSecurities are listedBombay Stock Exchange Ltd.National Stock Exchange of India Ltd.The Calcutta Stock Exchange Ass. Ltd.

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NOTICENotice is hereby given that the 32nd Annual General Meeting of the Members of CMC Limited will be held on Tuesday, June 24, 2008 at3.30 P.M. at Bhartiya Vidya Bhavan Auditorium, BVB Hyderabad Kendra No. 5-9-1105 Basheerbagh-King Koti Road, Hyderabad – 500 029,Andhra Pradesh, to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Profit and Loss Account for the year ended on 31st March, 2008 and the Balance Sheet as atthat date and the Reports of the Board of Directors and the Auditors thereon.

2. To declare a dividend.

3. To appoint a Director in place of Dr KRS Murthy, who retires by rotation and, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr Shardul Shroff, who retires by rotation and, being eligible, offers himself for re-appointment.

5. To consider, and if thought fit, to pass with or without modification the following resolution as an Ordinary Resolution:

“RESOLVED THAT subject to the provisions of Sections 224, 225 and other applicable provisions, if any, of the Companies Act, 1956,Messrs Deloitte Haskins & Sells, Chartered Accountants, be and are hereby appointed as Auditors of the Company to hold office fromthe conclusion of this Annual General Meeting upto the conclusion of the next Annual General Meeting of the Company, in place ofthe retiring Auditors Messrs S.B. Billimoria & Co., Chartered Accountants, to examine and audit the accounts of the Company for thefinancial year 2008-09, at such remuneration as may be mutually agreed between the Board of Directors of the Company and theAuditors, plus service tax and reimbursement of out of pocket expenses at actuals.”

SPECIAL BUSINESS:

6. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

“RESOLVED THAT Ms Kalpana Morparia be and is hereby appointed as Director of the Company liable to retire by rotation.”

7. To consider and, if thought fit, to pass the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 309 and other applicable provisions, if any, of the Companies Act, 1956 (the Act)a sum not exceeding one per cent per annum of the net profits of the Company calculated in accordance with the provisions ofSections 198, 349 and 350 of the Act, be paid to and distributed amongst the Directors of the Company or some or any of them (otherthan the Managing Director and the Whole-time Directors, if any) in such amounts or proportions and in such manner and in allrespects as may be directed by the Board of Directors and such payments shall be made in respect of the profits of the Company foreach year of the period of five years commencing 1st April, 2007.”

New Delhi By order of the BoardApril 17, 2008 For CMC Limited

Registered Office:CMC CentreOld Mumbai Highway, Gachibowli VIVEK AGARWALHyderabad-500 032 (A.P.) Company Secretary & Head - Legal

Notes:1. A Member entitled to attend and vote is entitled to appoint a Proxy to attend and vote at the meeting instead of himself and

the Proxy need not be a Member of the Company. The Proxy Form must be deposited at the Registered Office of the Companynot later than 48 hours before the commencement of the meeting.

2. The relevant details as required by Clause 49 of the Listing Agreements entered into with the Stock Exchages of person seekingappointment/re-appointment as Directors under item nos. 3,4 & 6 above, are annexed hereto.

3. The relative explanatory statement pursuant to Section 173(2) of the Companies Act, 1956 setting out the material facts in respect ofthe business under item nos. 5, 6, & 7 is annexed hereto.

4. Members who hold shares in dematerialised form are requested to bring their DP ID and Client ID numbers for easy identification ofattendance at the meeting.

CMC Limited


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5. For the convenience of the Members, attendance slip is enclosed elsewhere in the Annual Report. Members/Proxy Holders/AuthorisedRepresentatives are requested to fill in and affix their signatures at the space provided therein and surrender the same at the venue.Proxy/Authorised Representatives of a member should state on the attendance slip as ‘Proxy’ or ‘Authorised Representative’ as the casemay be.

6. The Register of Members and the Share Transfer Books of the Company will remain closed from Wednesday, June 18, 2008 to Tuesday,June 24, 2008 (both days inclusive).

7. The dividend as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid at par after June 24,2008 to (i) those shareholders whose names appear on the Company’s Register of Members after giving effect to all valid share transfersin physical form lodged with the Company on or before June 17, 2008; (ii) in respect of shares held in electronic form to those beneficiarieswhose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and CentralDepository Services (India) Ltd. (CDSL) as at the end of business hours on June 17, 2008.

8. In accordance with SEBI’s directions vide their Circular No. DCC/FITT/Cir-3/2001 dated October 15, 2001, arrangements have beenmade to credit your dividend amount directly to your bank account through the Electronic Clearing Service (ECS).In case you hold shares in physical form, please furnish your bank details in the ECS Mandate Form enclosed separately together witha xerox copy of your cheque leaf and return to our Registrars, Karvy Computershare Private Limited on or before June 17, 2008. The saiddetails in respect of the shares held in electronic form should be sent to your respective Depository Participant and not to the Registraras the Registrar is obliged to use only the data provided by the Depository while making payment of dividend.

9. Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, dividends which remain unclaimed for a period of 7 years fromthe date of transfer of the same to the Company’s unpaid dividend account will be transferred to the Investor Education and ProtectionFund (IEP Fund) established by the Central Government. The following are the details of the dividends paid by the Company andrespective due dates for claiming by the Shareholders:

Dividend Year Date of Declaration of divided Last date for claim

2000-01 28-09-2001 27-09-2008

2001-02 29-08-2002 28-08-2009

2002-03 31-07-2003 30-07-2010

2003-04 30-08-2004 29-08-2011

2004-05 17-06-2005 16-06-2012

2005-06 27-06-2006 26-06-2013

2006-07 25-06-2007 24-06-2014

Further the Company shall not be in a position to entertain the claims of the Shareholders for the unclaimed dividends which havebeen transferred to the credit of IEP Fund.In view of the above, the Shareholders are advised to send all the un-encashed dividend warrants pertaining to the above years to ourRegistrar & Share Transfer Agents for revalidation and encash them before the due dates before it is transferred to the IEP Fund.

10. Pursuant to Section 109A of the Companies Act, 1956, Shareholders are entitled to make nomination in respect of shares held by them.Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be madeavailable on request) to the Registrar & Share Transfer Agents of the Company.

11. Members are requested to send their queries, if any, to the Company’s Corporate Office at New Delhi at least ten days before the dateof the meeting so that information can be made available at the meeting.

12. As an austerity measure, copies of the Annual Report will not be distributed at the Annual General Meeting. Members are requestedto bring their copies to the meeting.

By order of the Board For CMC Limited

New Delhi VIVEK AGARWALApril 17, 2008 Company Secretary & Head - Legal

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DETAILS OF DIRECTORS SEEKING APPOINTMENT/REAPPOINTMENT AT THE ANNUAL GENERAL MEETING(In Pursuance of Clause 49 of the Listing Agreement)

For CMC Limited


Name

Date of Birth

Date of Appointment

Qualifications

Expertise in specific functionalareas

Directorships held in other PublicCompanies (excluding foreigncompanies)

Memberships/ Chairmanships ofCommittees of other PublicCompanies (includes only AuditCommittee and Share Transfercum Shareholders GrievanceCommittee)

Dr KRS Murthy

22.03.1938

16.10.2001

• Doctorate in BusinessAdministration from HarvardBusiness School,

• Masters in Mgmt. fromSloan School, MIT.

• Gold Medalist of Mysore University.Business Management

National Stock Exchange –Public Representative

Himatsingka Seide Ltd.Independent Director

Himatsingka Seide Ltd.Audit Committee

Mr Shardul Shroff

01.10.1955

16.10.2001

• B.Com (Hons) from SydenhamCollege, Mumbai,

• LL.B. from Government LawCollege, Mumbai,

• Advocate on Record,Supreme Court.

Legal, Project Finance, Mergers &Acquisitions, Insurance, CorporateFinance etc.

Infrastructure DevelopmentFinance Co. LimitedApollo Tyres LimitedNIIT LimitedBallarpur Industries LimitedAshok Leyland LimitedMysore Cements Limited

Infrastructure DevelopmentFinance Corporation Ltd.Audit Committee

Apollo Tyres LimitedShare Grievance Committee

NIIT LimitedAudit CommitteeRemuneration/CompensationCommittee - Chairman

Ms Kalpana Morparia

30.05.1949

11.03.2008

Bachelor in Science and Law fromBombay University.

Restructuring, Merger and otherManagement activities

ICICI Prudential Life Insurance Co. Ltd.ICICI Lombard Gen. Insurance Co. Ltd.ICICI Prudential Asset ManagementCo. LtdICICI Securities Ltd.Dr Reddy’s Laboratories Ltd.Bennett Coleman & Co. Ltd.(The Times of India Group)

ICICI Lombard Gen. Insurance Co.Ltd.Board Governance Committee(Chairperson)Investment CommitteeICICI Prudential Life Insurance Co.Ltd.Investment Committee (Chairperson)Governance Committee(Chairperson)ICICI Securities Ltd.Audit CommitteeESOS Compensation CommitteeDr Reddy’s Laboratories Ltd.Audit CommitteeCompensation CommitteeBennett Coleman & Co. Ltd.(The Times of India Group)Audit Committee

CMC Limited


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Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956

Item No. 5

Appointment of Statutory Auditors

Presently the Company’s accounts are being audited by Messrs S.B. Billimoria & Co., (SBB). SBB is an associate of Messrs Deloitte Haskins &Sells (DHS). SBB have informed the Company that they do not wish to seek re-appointment as statutory auditors of the Company for thefinancial year 2008-09.

In view of the above, and based on the recommendations of the Audit Committee, the Board of the Directors has, at its meeting held onApril 17, 2008, proposed the appointment of DHS as the statutory auditors in place of SBB for the financial year 2008-09.

The Company has received a special notice from a Member of the Company, in terms of the provisions of the Companies Act, 1956 (“Act”)signifying its intention to propose the appointment of DHS as the Auditors of the Company from the conclusion of this Annual GeneralMeeting till the conclusion of the next Annual General Meeting of the Company. DHS have expressed their willingness to act as Auditors ofthe Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section224(1B) of the Act.

The Members’ approval is being sought for the appointment of DHS as the Statutory Auditors and to authorise the Directors, on therecommendation of the Audit Committee, to determine the remuneration payable to the Auditors.

The Board of Directors recommend their appointment and none of the Directors is interested in the Resolution.

Item No. 6

Appointment of Ms Kalpana Morparia as a Director

Ms Kalpana Morparia was appointed as an Independent Director pursuant to Articles 82 & 85 of the Articles of Association of the Companyby the Board of Directors at its meeting held on March 11, 2008.

As per provisions of said Articles and Section 260 of the Companies Act, 1956, Ms Kalpana Morparia holds office up to the date of thisAnnual General Meeting. The Company has received a notice along with the deposit of Rs. 500 from a Member signifying intention topropose the appointment of Ms Kalpana Morparia as Director of the Company liable to retirement by rotation.

The Board of Directors is of the opinion that it would be in the interest of the Company to avail of Ms Morparia’s experience and hercontinuance will be of benefit to the Company.

The resolution is accordingly recommended for the approval of the Members.

None of the Directors except Ms Kalpana Morparia is concerned or interested in the Resolution.

Item No. 7

Commission to Non-Executive Directors

Taking into account the responsibilities of the Directors, it is proposed that in terms of Section 309(4) of the Companies Act, 1956, theDirectors (apart from the Managing Director and the Whole-time Directors, if any) be paid, for each of the five financial years of the Companycommencing 1st April, 2007, remuneration not exceeding one per cent per annum of the net profits of the Company computed in accordancewith the provisions of the Companies Act, 1956. This remuneration will be distributed amongst all or some of the Directors in accordancewith the directions given by the Board.

All the Directors of the Company except the Managing Director, are concerned or interested in the Resolution at item no. 7 of the Notice tothe extent of the remuneration that may be received by them.

By order of the BoardFor CMC Limited


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1. FINANCIAL RESULTS

(Rs. in Crore)

Particulars 2007-08 2006-07

Income from Sales and Services 977.19 988.91

Other Income 11.90 5.49

Total Income 989.09 994.40

Operating Expenses 863.75 897.59

Profit before Depreciation, Interest and Tax 125.34 96.81

Depreciation 7.87 8.24

Interest 0.36 3.70

Profit before Tax 117.11 84.87

Provision for Taxation (incl. deferred Income Tax) 28.89 20.78

Profit after Tax 88.22 64.09

Add: Profit brought forward from previous year 210.62 167.11

Amount available for appropriations 298.84 231.20

Appropriations

Proposed Dividend 16.67 12.12

Tax on Proposed Dividend 2.83 2.05

Transfer to General Reserve 8.82 6.41

Balance carried to Balance Sheet 270.52 210.62

298.84 231.20

1.1 OPERATING RESULTS

During the year, your Company earned total revenue of Rs. 989.09 crore compared with Rs. 994.40 crore

during the previous year, registering a marginal decline of 1% primarily due to a 3.6% reduction in sale of

equipment. The income from Sales and Services is Rs. 977.19 crore as compared to Rs. 988.91 crore in the

last year.

DIRECTORS’ REPORT

TO THE MEMBERS OF CMC LIMITED

Your Directors have pleasure in presenting the 32nd Annual Report and the Audited Statement of Accounts

for the year ended March 31, 2008.

CMC-1 p65 5/22/2008 9:24 PM7

CMC Limited


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The profit before tax at Rs. 117.11 crore registered an increase of 38% over the previous year mainly on

account of improvement in business mix towards more service business and International business

accompanied by improvement in operating efficiencies. The Company made a provision of tax totaling to

Rs. 28.89 crore, inclusive of Fringe Benefit Tax amounting to Rs. 1.47 crore. The Profit after Tax stood at Rs.

88.22 crore registering an increase of 38% over the previous year.

2. DIVIDEND

In view of the Company’s performance, your Directors are pleased to recommend for approval, a dividend of

110% for the year ended March 31, 2008 (Rs. 11 per equity share) on the paid-up equity share capital.

3. TRANSFER TO RESERVES

The Company proposes to transfer Rs. 8.82 crore to the General Reserve out of amount available for

appropriation, and an amount of Rs. 270.52 crore is proposed to be retained in the Profit and Loss Account.

4. BUSINESS OPERATIONS

The business operation of the Company is divided into four Strategic Business Units (SBUs):

4.1. Customer Services (CS)

The CS SBU undertakes activities related to IT infrastructure including infrastructure architecture, design

and consulting services; turnkey system integration of large network and data center infrastructures including

supply of associated equipment and software; on-site and remote facilities management of multi-location

infrastructures for domestic and international clients.

The CS SBU earned revenue of Rs. 573.55 crore during the year compared to Rs. 579.04 crore earned during

the previous year. The marginal drop in revenue is attributable to the company’s strategy of defocusing

from low margin equipment sale business.

Continued focus on Infrastructure Services enabled the CS SBU to win several large domestic service deals

in facility management, nationwide application rollout and helpdesk services, nationwide petrol stations

retail automation rollout, design and rollout of a nationwide vehicle tracking system for a large petroleum

distribution company.

4.2 Systems Integration (SI)

The SI SBU undertakes the activities of solution deployment that includes embedded systems, software

development, software maintenance and support, turnkey project implementation and systems consultancy.

The SI SBU earned revenue of Rs. 297.84 crore during the current year compared to Rs. 297.25 crore earned

in the previous year.

In the domestic market the SI SBU continues to be a strong player in general insurance sector, defense,

games management and e-Governance space. During the year the SBU extended its reach in the insurance

sector by bagging two more orders from private sector insurance companies in India. The SI SBU also built

capabilities and offerings in the new vertical of construction industry/township management during the

year. In the global market, SI SBU continues to be strong in shipping, transportation and embedded systems.

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4.3 IT Enabled Services (ITES)

The ITES SBU undertakes business process outsourcing services including total front-office/back-office

outsourcing; office records digitization and document management; examination results and recruitment

management; legacy data migration management; with specific business domain expertise and on-demand

software services.

The ITES SBU earned revenue of Rs. 64.99 crore during the year compared to Rs. 71.21 crore earned in the

previous year. The revenue during the current year came down due to completion of some large projects.

However, the ITES SBU extended its reach in additional verticals like insurance, banking, legal, logistics, and

publishing domains in the global market with its KPO offerings.

4.4 Education & Training (E&T)

E&T SBU of the company offers courses on information technology and allied areas including professional

courses, career development courses etc.

The E&T SBU earned revenue of Rs. 47.27 crore compared to Rs. 42.39 crore earned in the previous year,

registering an increase of 12% over the previous financial year.

E&T continues to be a preferred vendor for a large number of IT and ITES companies both for induction

programmes as well as refresher programmes.

During the year the company launched job-oriented programmes for honing the skills of the students to

become employable in various IT/ITES companies. Some of these programmes are also run in collaboration

with other IT companies.

5. SPECIAL ECONOMIC ZONE

The Company had taken up setting up of an IT and ITES sector specific Special Economic Zone (SEZ), named

Synergy Park, at its Campus at Gachibowli, Hyderabad.

The SEZ is coming up in two phases. Phase I of the project was inaugurated by the Hon’ble Chief Minister of

Andhra Pradesh on February 11, 2008. The Company has so far spent Rs. 29.27 crore on this project till

March 31, 2008. Construction of Phase II is planned to be completed by the end of 2009.

6. CREDIT RATING

ICRA Limited carried out a credit rating assessment of the Company both for short term and long term

exposures in compliance with BASEL II norms implemented by Reserve Bank of India for all banking facilities.

ICRA has assigned A1+ rating (indicating highest-credit-quality) for short term debt instruments up to

Rs. 100 crore and LAA rating (indicating high-credit-quality) for long term exposure (both fund based as well

as non-fund based) for a total amount of Rs. 250 crore. This will enable the Company to access banking

services at low costs. This also reflects the improvement in margins, working capital management and cash

flows of the Company.

CMC Limited


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7. SUBSIDIARY COMPANY

Your Company has a wholly owned subsidiary CMC Americas Inc. in USA. The Company has been granted

exemption for the year ended March 31, 2008 by the Ministry of Corporate Affairs from attaching to its

Balance Sheet, the Annual Report of the Subsidiary Company. As per the terms of the Exemption Letter, a

statement containing brief financial details of the Subsidiary Company for the year ended March 31, 2008 is

included in the Annual Report.

The Consolidated Financial Statements of the Company and its Subsidiary, prepared in accordance with

Accounting Standard AS-21 form part of the Annual Report and Accounts.

The Annual Accounts of the Subsidiary Company and related detailed information will be made available to

the Shareholders of the Company seeking such information. The Annual Accounts of the Subsidiary Company

are also kept for inspection by any investors at the Registered Office of your Company.

8. FIXED DEPOSIT

During the year, the Company has not accepted any fixed deposits under Section 58A of the Companies Act,

1956.

9. LISTING

The equity shares of the Company are listed with Bombay Stock Exchange, National Stock Exchange and

Calcutta Stock Exchange. There are no arrears on account of payment of listing fees to the Stock Exchanges.

10. DIRECTORS

Ms Kalpana Morparia was appointed on the Board of the Company with effect from March 11, 2008 as an

Additional Director. As per provisions of Section 260 of the Companies Act, 1956, Ms Morparia holds office

only up to the date of the forthcoming Annual General Meeting of the Company. The Company has received

a notice under Section 257 of the Act along with the requisite deposit, in respect of Ms Morparia, proposing

her appointment as a Director of the Company.

Mr C B Bhave stepped down from the Board with effect from February 15, 2008 on being appointed as

Chairman of Securities & Exchange Board of India. The Board records its appreciation of the contribution

made by Mr Bhave during the tenure as a Director.

Dr KRS Murthy and Mr Shardul Shroff, Directors, retire by rotation and being eligible, have offered themselves

for re-appointment.

11. COMMUNITY DEVELOPMENT

The Company has been actively promoting and supporting its staff members to volunteer for activities

related to community services. The Company has chosen to focus its efforts towards helping under privileged

and physically challenged children to overcome their shortcomings by organizing medical checkups, sports

activities and also helping their institutions with volunteers and financial support. During the year under

review, your Company also organized a ‘Special Athletic Event 2007’ for the mentally challenged children.

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The Company participates in the community development programmes at the Tata Group level. The Company

believes in social equality and has adopted a policy on Affirmative Action for Scheduled Castes and Scheduled

Tribes Community. The Company also participated in the programme of Forum for Academic Access and

Excellence (FAAE), a Delhi based society, in providing scholarships to meritorious students from poor families.

12. BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its journey on the path of business excellence using Tata Business Excellence

Model (TBEM), which has been adopted four years back. The adoption of model entails promoting continuous

improvement across the Company with focus on core values such as agility; focus on future and systems

perspective.

During the year, CMC Center was assessed at SEI CMMI Level 3 while its automotive group was assessed at

level 3 against Pathfinder Automotive Spice Model (ISO/IEC 15504). Your Company intends to pursue such

third party assessments with progressive increase in scope as well as higher maturity levels.

13. CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management

Discussion and Analysis, Corporate Governance as well as the Secretarial Auditors’ Certificate regarding

compliance of conditions of Corporate Governance forms part of the Annual Report. Your Company is also

following the Secretarial Standard norms issued by the Institute of Company Secretaries of India.

14. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required under the Companies (Disclosure of particulars in the Report of Board of Directors)

Rules, 1988 in respect of energy conservation, technology absorption and foreign exchange earnings and

outgo is given in the Annexure to the Report.

15. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors based on the

information and representations received from the operating management confirm that:

i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been

followed with no material departures;

ii) The Directors have selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the

state of affairs of the Company as on March 31, 2008 and of the profit of the Company for that

period;

iii) The Directors have taken proper and sufficient care to the best of their knowledge and ability for

the maintenance of adequate accounting records in accordance with the provisions of the

Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting

fraud and other irregularities; and

iv) The Directors have prepared the Annual Accounts on a ‘going concern’ basis.

CMC Limited


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16. AUDITORS

M/s S.B. Billimoria & Co., Chartered Accountants, who are the Statutory Auditors of the Company hold office, in accordance

with the provisions of the Companies Act, 1956, upto the conclusion of the forthcoming Annual General Meeting.

M/s S.B. Billmoria & Co. have communicated that they are not seeking re-appointment at the ensuing Annual General Meeting.

The Company has received a special notice from a Member of the Company, in terms of the provisions of the Companies Act,

signifying the intention to propose the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants (DHS), as the

Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting until the conclusion of the

next Annual General Meeting. DHS have also expressed their willingness to act as Auditors of the Company, if appointed, and

have confirmed their eligibility. In this regard, attention of the Members is invited to item no. 5 of the Notice convening the

forthcoming Annual General Meeting.

17. PARTICULARS OF STAFF

Information as required under section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees)

Rules, 1975, as amended, is set out in the Annexure to this report. The Ministry of Corporate Affairs has amended the Companies

(Particulars of Employees) Rules, 1975 to the effect that the particulars of the employees of the Companies engaged in

Information Technology Sector, posted and working outside India, not being Directors or their relatives, need not be included

in the statement but, such particulars shall be furnished to the Registrar of Companies. Accordingly, the statement included

in this report does not contain the particulars of employees who are posted and working outside India.

18. ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The

Directors would also like to thank the employees, shareholders, customers, suppliers and bankers for the continued support

given by them to the Company and their confidence reposed in the management.

For and on behalf of the Board

New Delhi S RAMADORAI

April 17, 2008 Chairman

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Annexure to the Directors’ Report

Particulars of Conservation of energy, Technology absorption and Foreign exchange earnings and outgo in terms of section 217(1)(e)of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988 forming partof the Directors’ Report for the year ended March 31, 2008

A. CONSERVATION OF ENERGY

The operations of the Company being IT related require normal consumption of electricity.

Your Company is not an industry as listed in Schedule to Rule 2 of the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rule, 1988.

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption - as per Form B given below:

FORM B

1. Research and Development (R&D)

a. Specific Areas in which Research and Development (R&D) is being carried out by the Company

i. Cost effective GPS based Vehicle tracking system

ii. Locator services based on GPS

iii. Mobile applications for :

1. Social Sector

2. Financial Sector (Micro Finance)

iv. Biometric adapter for ATMs to enable personal identification.

b. Benefits derived as a result of R&D

i. The areas identified have significant application potential and CMC has been building solutions and providing associatedservices to customers in key sectors. The products/competencies developed in the above areas would enable the Companyto address emerging market opportunities specifically in sectors like Transportation, Retail, Government, Law and Order aswell as the Financial sector.

ii. Tracking of vehicles / objects by service providers for better and assured service delivery is becoming a business necessityand CMC’s presence in this segment require faster consolidation and hence the focus on cost reduction will enhance marketshare.

iii. Investments made in Mobile application technology provides the Company a platform to upgrade any existing applicationand make it mobile as well as conceptualize “real time” business applications.

iv. Product enhancements by way of features and functionality to suit biometric offerings will help in retaining many of theexisting customers and also enlarge customer base both in domestic and international markets. Integrating and adaptingtechnology for personal identification in the financial transactions have enabled secured financial transactions to the visuallychallenged or to those who are not literate. This has enabled the Company to open new lines of business and extend theapplication of biometric to a wider end use.

c. Future Plan of Action

i. Develop a suite of products to enhance our capability in providing cost effective locator services to domains like shipping,road transportation, fleet management and such applications in police, para military and other security agencies.

ii. Extending the biometric suite of products to other civilian uses as in national ID card and other large scale identificationsystems.

iii. Providing an integrated solution to the financial and banking industry for personal identification using biometric technologiesand also to the mobile applications.

CMC Limited


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d. Expenditure on R&D

(Rs. in crore)

Particulars 2007-08 2006-07

A Capital 0.26 0.57

B Recurring 7.70 11.09

C Total 7.96 11.66

D Total R&D Expenditure as a Percentage of Turnover 0.80 1.17

2. Technology absorption, adaptation and innovation

a. Efforts made towards technology absorption, adaptation and innovation

i. CMC proactively uses new and emerging technologies for conceptualizing solutions to meet its business needs. The expertisegained in early usage results in developing/enhancing our offerings and provides us an advantage in differentiating ourCompany from others.

ii. CMC constantly interacts with its large vendors and suppliers to understand and absorb new developments in technologiesand offerings and is an invaluable tool for constant updation.

iii. Project teams are encouraged to try out solutions to their problems by bringing about big and small improvements therebyfostering innovation.

b. Benefits derived as a result of the above efforts

i. Keep the current applications and services updated and as per the emerging needs.

ii. Develop integrated and multi technology solutions in order to meet customer needs.

iii. Ability to respond to unique requirements of the customers and system engineer a solution with building blocks obtainedinternally or from third parties.

c. Information regarding imported technology

Your Company has not imported any technology.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

1. Activities Relating to Exports, Initiatives to increase exports, Development of new export markets for products and services& export plan

As a part of its core strategy, the Company is focusing on increasing exports of its services by leveraging wide marketing reach ofits parent Company, Tata Consultancy Services Limited. The Company has established itself as a major supplier of EmbeddedSystem Services and software solution in key industry verticals and e-Governance space.

2. Total Foreign Exchange Earnings & Outgoings

The foreign exchange earnings of the Company during the year were Rs. 142.49 crore while the outgoings were Rs. 249.19 crore.


New Delhi S RAMADORAIApril 17, 2008 Chairman

15

Annexure To The Directors’ Report

Statement pursuant to Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975and forming part of the Directors’ Report for the year ended March 31, 2008

Name Age Designation/ Remuneration Qualification Experience Date of Previous(Years) Nature of Duties (Rs.) ( Years) Joining Employment

(A) Personnel who are in receipt of remuneration aggregating not less than Rs. 24,00,000 per annum and employed throughout the year:

R Ramanan 50 Managing Director & CEO 6,000,000 B Tech 27 16.10.2001 VP-Tata Consultancy

Services

Prasad Rangnekar 49 Global Head, Emerging 2,941,200 B Tech 22 01.07.2004 ICICI Infotech Ltd

Technologies

Prabhat Mittra 52 Global Head - CS & ITES 2,979,426 M Tech 27 02.05.2005 Info Start Pvt Ltd.

Uday Bhobe 48 Global Head - SI 2,941,200 B Tech 27 18.07.2005 Roamware (I) Pvt Ltd

Saibal Ghosh 55 Global Head - E&T & 2,446,800 B Tech, PGCGM 34 08.05.1989 ICIM Ltd.

National Sales Head

(B) Personnel who are in receipt of remuneration aggregating not less than Rs 2,00,000 per annum and employed for the part ofthe year:

NIL

Notes:

1. The above remuneration includes salaries, commission, contribution to Provident Fund, Medical reimbursement, LTC, bonus, if any andtaxable value of perquisites.

2. The appointment is contractual as per the policy/rules of the Company.

3. Terms and conditions are as per the Appointment Letter given to appointee from time to time.

4. All the employees have adequate experience to discharge the responsibilities assigned to them.

5. The above details are only for employees located in India

6. None of the above employees holds shares as prescribed in Section 217(2A)(a)(iii) of the Act and none of them is related to any Director.


New Delhi S RAMADORAIApril 17, 2008 Chairman

CMC Limited


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MANAGEMENT DISCUSSION AND ANALYSIS

Overview

The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and GenerallyAccepted Accounting Principles (GAAP) in India. There are no material departures from prescribed accounting standards inthe adoption of the accounting standards. The management of CMC Limited accepts responsibility for the integrity andobjectivity of these financial statements, as well as for various estimates and judgements used therein. These estimates andjudgements relating to the financial statements have been made on a prudent and reasonable basis, in order that thefinancial statements reflect in a true and fair manner, the form and substance of transactions and the state of affairs andprofits for the year.

Industry structure and developmentAs per the economic survey 2007-08, the macro-economic fundamentals continue to inspire confidence and the investmentclimate in the country is one of optimism.

GDP is estimated to have grown at 8.7% during 2007-08.

As per the early estimates of NASSCOM, the Indian IT industry is estimated to have crossed USD 64 billion in annual revenuesin the year 2007-08, resulting in a growth of over 33%. Services and software exports have contributed USD 40.3 billion andestimated to have registered 29% growth over the previous year.

The domestic market size is estimated to constitute USD 23.2 billion registering a growth of around 43% over the previousyear. The domestic market continues to show a strong technology adoption trend with a large services and solutions drivencomponent. The appreciation of the rupee is also making India more attractive as a market even for players that had earliermaintained a stricter focus on exports.

The drivers for growth continue to be the financial services, communication/media and the manufacturing verticals in additionto the Government sector.

Opportunity and ThreatsOpportunity:NASSCOM estimates a robust growth of the domestic and International markets for the IT industry. The worldwide IT/ITESsector spends are estimated to have grown at 7.3% to nearly $1.7 trillion in 2007, overcoming concerns of budgetary cuts dueto an economic slowdown in the US and its spillover effects. FY08 export earnings were approximately $40 billion. Directemployment is expected to reach nearly 2 million, an increase of 375,000 employees from last year.

This opens up opportunities for the Company to impart its IT education and training, as superior manpower capability willbe a crucial differentiator in sustaining competitive advantage. This desire for IT training is being fuelled not just by themetros and Tier I & II level cities, but by remote locations – which offers prospects both for educational set ups andinfrastructural set ups.

India continues to be one of the fastest growing economies of the world. The Country is in an infrastructural overdrive modeand IT companies are playing a key role in charting this course. New airports, ports, highways, refineries, SEZs, telecommnetworks, retail chains are being sanctioned and built on a regular basis. The bulk of this infrastructural network is driven byhardware and software services and products. The Company with its significant domestic presence is well placed to exploitthese opportunities. The Company has Joint Go to Market strategy with Tata Consultancy Services Limited to address largebusiness opportunities.

India is especially strong in embedded software. With more consumer, telecomm, computer, industrial and automotive productsevolving towards the embedded SoC (System on Chip) design and development model, the Company is in a strong positionto leverage its embedded systems engineering skills and become a critical link in the global manufacturing and design chain.

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Threats:As the IT market in India is growing and also maturing at a fast pace, speed and low cost of delivery is becoming thedeterminants of customer choice of vendors.

MNCs and large companies are increasingly eyeing the domestic market and bring with them economies of scale and end-to-end services capability to bear on the market. In addition, SMEs are also offering niche services and solutions and offeringan attractive proposition to the customers. The rapid technological obsolescence and the possibility of cheaper alternative toapplication/solution ownership is a threat to vendors in terms of investment protection.

Scarcity of the right talent as well as the ability to retain them is one of the critical factors confronting all IT companies.

Financial Performance:

Revenues:During the year under review, the Company earned total operating revenue of Rs. 977.19 crore compared with Rs. 988.91crore during last year, registering a decline of 1.2% primarily on account of 3.6% decline in low margin equipment business.The share of equipment business in total operating revenue declined from 40.8% last year to 39.8% in the year under review,with the corresponding improvement in the share of services revenue from 59.2% to 60.2%, as a part of the strategy of theCompany to continuously improve the revenue mix. Similarly the share of international revenue increased from 29.3% to29.6%. International revenue in Rupee terms was impacted by the appreciation of Indian Rupee against major internationalcurrencies during the year. The impact of Rupee appreciation in the total Operating Revenue as well as International Revenueduring the year is estimated at Rs. 14.70 crore. The International Revenue share (adjusted for the above impact of Rupeeappreciation) was 30.6% and the Services Revenue share (adjusted for the above impact of Rupee appreciation) was 60.8%.The other income increased from Rs. 5.49 crore to Rs. 11.90 crore, primarily on account of income from investment of surplusfunds and higher amount of unclaimed balances & provisions written back.

The revenue mix of 2007-08 compared with 2006-07 is given below:

Segment 2007-08 2006-07(Rs / crore) % (Rs / crore) %

Equipment 389.11 39.8 403.55 40.8Services 588.08 60.2 585.36 59.2Total Operating Revenue 977.19 100.0 988.91 100.0

Domestic 688.29 70.4 699.19 70.7International 288.90 29.6 289.72 29.3Total Operating Revenue 977.19 100.0 988.91 100.0

Expenditure:During the year under review, the operating expenses at Rs. 863.75 crore decreased by 3.77% compared with Rs. 897.58 croreincurred in the previous year in line with variation in operating revenue. As a percentage of total operating revenue, theseexpenses registered a decline to 88.4% from 90.8%. Cost of equipment purchase for resale has declined by 4.9% to Rs. 376.60crore in line with 3.6% decline in revenue from sale of equipments. Manpower cost has gone up by 10.6% on account ofincrease in manpower strength by 3.7% and general increase in level of compensation to employees. The manpower cost asa percentage of operating revenue has increased from 17.7% to 19.8%. Other operating expenses have decreased by 11.0 %to Rs. 293.99 crore compared with Rs. 327.08 crore. Last year other operating expenses were inclusive of Rs. 23.47 croreprovisioning on account of possible losses that may arise from a contract under dispute. The decline in other operatingexpenses is 3.2%, if we adjust for the above provisioning in last year. This decline in operating expenses is attributable to strictcost controls exercised during the year.

CMC Limited


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As a result, operating profit (EBITDA) has increased by 24% from Rs. 91.33 crore to Rs. 113.45 crore and as a percentage oftotal operating revenue, EBITDA margin has increased from 9.2% to 11.6%.

The interest cost decreased by 90.2% to Rs. 0.36 crore during the current year compared with Rs. 3.70 crore incurred in the lastyear as a result of reduction in borrowings due to improved cash flows. Depreciation charge declined by 4.5% fromRs. 8.24 crore to Rs. 7.87 crore.

As a result, Profit Before Tax (PBT) has increased by 38% from Rs. 84.87 crore to Rs. 117.11 crore and as a percentage of totalrevenue PBT margin has increased from 8.5% to 11.8%.

The provision for taxation (including deferred tax and fringe benefit tax) increased to Rs. 28.89 crore from Rs. 20.78crore in the last year, resulting in an increase of 39%. The effective tax rate for the Company has marginally increasedfrom 24.5% to 24.7%.

Profit After Tax (PAT) has increased from Rs. 64.10 crore to Rs. 88.22 crore, an increase of 37.6% over the previous year. PAT as apercentage of total revenue has increased from 6.4% to 8.9%.

Financial Position

Fixed AssetsThe gross fixed assets as at 31st March, 2008 was Rs. 161.31crore (including capital WIP) compared with Rs. 158.07 crore as atthe beginning of the year, resulting in an increase of 2% during the year, mainly on account of Rs. 2.85 crore spent during theyear on ongoing project of setting up Special Economic Zone (SEZ) at Gachibowli Campus of the Company at Hyderabad.

InvestmentsInvestments increased from Rs. 8.18 crore as at 31st March, 2007 to Rs. 103.81 crore as at 31st March, 2008, on account ofinvestment of surplus funds amounting to Rs. 95.63 crore in short term instruments of mutual funds.

Working Capital

Net current assets as at 31st March, 2008 declined to Rs.140.30 crore compared to Rs. 154.54 crore at the beginning of theyear, mainly on account of decrease in current assets from Rs. 503.72 crore to Rs. 470.09 crore, which is partly offset by decreasein current liabilities and provisions from Rs. 349.18 crore to Rs. 329.80 crore. Decrease in current assets is attributed mainly todecrease in sundry debtors from Rs. 241.67 crore to 223.53 crore due to improved collections, decrease in unbilled revenuefrom Rs. 118.13 crore to Rs. 109.95 crore due to increased focus on faster billing and reduction in inventory from Rs. 23.07crore to Rs. 19.87 crore. The level of debtors in terms of number of days has decreased from 89 days to 83 days. Debtors oversix months (net of provisioning) have increased 18% to Rs. 47.43 crore (21% of total debtors) from Rs. 41.68 crore (17% of totaldebtors). Of remaining Rs. 176.10 crore, debtors less than 30 days are Rs. 92.03 crore (41% of total debtors). Similarly level ofaccrued debtors has declined from 44 days to 41 days. Total debtors days have thus declined from 133 days to 124 days, thebest ever achieved in last 5 years.

Capital Structure

Net worth of the Company as at 31st March, 2008 was Rs. 303.53 crore compared with Rs. 232.24 crore at the beginning of theyear resulting in an increase of 31% during the year mainly on account of profit after tax earned during the year.

Loan funds as at 31st March, 2008 were Rs. 28.93 crore borrowed from TCS for construction of SEZ at Gachibowli, Hyderabad.

As a result the debt equity ratio has increased from 0.08:1 to 0.09:1.

Segment-wise ReviewCustomer ServicesThe Customer Services (CS) SBU earned revenue of Rs. 573.55 crore during the year under review compared to Rs. 579.04crore in the previous year, registering a marginal decline of 0.9%, primarily on account of defocus from low margin equipmentbusiness. The share of CS SBU revenue in total revenue was 58.3% during the year under review compared to 58.2% in theprevious year. The Profit Before Interest and Tax (PBIT) earned by CS SBU during the year under review was Rs. 47.55 crore, anincrease of 5.6% over Rs. 45.04 crore earned in the previous year. CS SBU’s contribution to total PBIT has however declinedfrom 50.9% to 40.5% during the year under review. The profitability of CS SBU improved from 7.8% to 8.3%.

19

Systems Integration

The Systems Integration (SI) SBU earned revenue of Rs. 297.84 crore during the year under review compared toRs. 297.25 crore in the previous year. The share of SI SBU revenue in total revenue increased to 30.1% during the yearunder review compared to 29.9% in the previous year. The Profit Before Interest and Tax (PBIT) earned by SI SBU duringthe year under review was Rs. 90.29 crore, an increase of 43.0% over Rs. 63.14 crore earned in the previous year. SI SBU’scontribution to total PBIT has increased from 71.3% to 76.9% during the year under review. The profitability of SI SBUimproved from 21.2% to 30.3%.

IT Enabled Services

The IT Enabled Services (ITES) SBU earned revenue of Rs. 64.99 crore during the year under review compared to Rs. 71.21 crorein the previous year, registering a decline of 8.7%, primarily on account of certain international projects coming to an endduring the year. The share of ITES SBU revenue in total revenue declined to 6.6% during the year under review compared to7.2% in the previous year. The Profit Before Interest and Tax (PBIT) earned by ITES SBU during the year under review wasRs. 12.18 crore, a decrease of 41.1% over Rs. 20.69 crore earned in the previous year. ITES SBU’s contribution to total PBIT hasdecreased from 23.4% to 10.4% during the year under review. The profitability of ITES SBU declined from 29.1% to 18.7%.

Education & Training

The Education and Training (E&T) SBU earned revenue of Rs. 47.27 crore during the year under review compared to Rs. 42.39crore in the previous year, registering an increase of 11.5%. The share of E&T SBU revenue in total revenue increased to 4.8%during the year under review compared to 4.3% in the previous year. The Profit Before Interest and Tax (PBIT) earned by E&TSBU during the year under review was Rs. 10.18 crore, an increase of 30.2% over Rs. 7.82 crore earned in the previous year. E&TSBU’s contribution to total PBIT has remained almost unchanged at 8.7%. during the year under review. The profitability ofE&T SBU increased from 18.4% to 21.5%.

Future outlook

The Company believes that the current trends in IT spend both domestically and in the international market presentsunprecedented opportunity for growth. Liberalization and opening up of more infrastructure sectors like roads, airports andsea ports, national e-Governance initiatives and implementation of Mission mode projects, recent policy initiatives to makeIndian companies more competitive including new policy on Special Economic Zone, the focus of Indian corporates tobenchmark themselves with leading global players in terms of quality of processes and competitiveness, is going to driveincrease in IT spend. The Company is well poised to exploit the emerging opportunities both in India and internationalmarket in synergy with TCS.

Risk and Concerns

A comprehensive and integrated risk management framework forms the basis of all the de-risking efforts of the Company.Formal reporting and control mechanisms ensure timely information availability and facilitate proactive risk management.These mechanisms are designed to cascade down to the level of the line managers so that risks at the transactional level areidentified and steps are taken towards mitigation in a decentralised fashion.

The Board of Directors is responsible for monitoring risk levels on various parameters and the Managing Director &CEO ensures implementation of mitigation measures. The Audit Committee provides the overall direction on the riskmanagement policies.

1. Business risks

Excessive dependence on any single business segment increases risks. The Company continuously makes efforts to broadbase and diversify its revenue stream to prevent undesirable concentration in any one vertical technology client orgeographic area.

Excessive exposure to a few large clients has the potential to impact profitability and to increase credit risk. However,large clients and high repeat business lead to higher revenue growth and lower marketing cost. Therefore, the Companymakes efforts to strike a balance. CMC actively seeks new business opportunities and clients to reduce clientconcentration levels.

CMC Limited


20

Hardware supply and integration is significant part of our revenue for which the Company depends on OEMs. Any defaultand delays on the part of OEMs exposes the Company to the risk of not meeting its commitments to the customer. TheCompany has been making efforts to negotiate better terms with OEMs. In addition, the Company has reduced its shareof such business and is focusing on growing value added services business.

A high geographical concentration of business could lead to volatility because of political and economic factors in targetmarkets. However, individual markets have distinct characteristics – growth, IT spends, willingness to outsource, costs ofpenetration, and price points. Cultural issues such as language, work culture and ethics, and acceptance of global talentalso come into play. Due to these business considerations, the Company has decided not to impose any rigid limits ongeographical concentration. Exposure to the inherent risks in a specific geography consists of legal and contractual risksas well as tax related changes. The Company has a process of evaluating country risks by taking legal opinion from thelegal counsel operating/familiar with the geography.

Proactively looking for business opportunities in new geographies and thereby increasing their contribution to totalrevenues help manage this risk.

Vertical domains relate to the industries in which clients operate. CMC has chosen to focus on selected vertical segmentswith a view to leverage accumulated domain expertise to deliver enhanced value to its clients.

Being a Company exposed to rapid shifts in technology, an undue focus on any particular technology could adverselyaffect the risk profile of the Company. Given the rapid pace of technological change, CMC has chosen not to impose rigidconcentration limits. Often, industry characteristics and market dynamics determine the choice of technology.

2. Financial risks

The Company is exposed to longer recovery cycles and incidents of defaults by customers due to its involvement in largeturnkey projects implementation and Government entities in its customer profile resulting in need to finance higherlevel of working capital. The Company has been focusing on improved execution and negotiation of better terms withcustomers and vendors and also tightening the collection follow-up process. These measures have helped Company insignificant reduction in collection cycle and working capital, resulting in cash surplus. The Company is confident to haveadequate funding to finance its working capital requirements as well as future growth needs.

The volatility in foreign currency rates may impact the profitability of the company to the extent of its exposure to theInternational business and specific currencies. However, the Company has been able to use the internal hedge providedto it due to imports for domestic market and has demonstrated resilience to impact increased level of volatility in2007-08. The Company also takes forward covers to protect against movement in foreign currency rates.

The Company enjoys exemption from levy of income tax on profits earned by its Software Technology Parks. Any changein tax laws can adversely affect the profit after tax of the Company. The Company is in the process of setting up a SpecialEconomic Zone (SEZ) in its campus at Gachibowli, Hyderabad. Export of services from SEZ is eligible for certain taxexemptions, which will enable the Company to enjoy tax exemptions for longer term.

3. Legal risks

Litigation regarding intellectual property rights, patents and copyrights is significantly high in the software industry. Inaddition, there are other general corporate legal risks. The management has clearly charted out a review anddocumentation process for all contracts.

21

4. Internal process risks

The key resource for CMC is its employees. With increased competition from Indian and international IT services companies,there is an increased pressure on salary increases and consequent pressure on margins. As demand of specified skilled ITpersonnel outpace supplies, the Company faces higher risk of attrition. The Company has been focusing on creating afavorable work environment that encourages innovation and meritocracy to improve employee retention and to reduceattrition rate. The Company has also implemented differential pay structure to attract and retain high performers andemployees possessing key skills and domain knowledge.

Risk management processes at the operational level are a key requirement for reducing uncertainty in delivering high-quality software solutions to clients within budgeted time and cost. Adoption of quality assurance frameworks has ensuredthat risks are identified and measures are taken to mitigate these at the project plan stage itself.

The Company evaluates technological obsolescence and the associated risks on a continuing basis and makesinvestments accordingly.

Internal Control Systems and their Adequacy

The Company has an adequate system of internal controls implemented by the management towards achieving efficiency inoperations, optimum utilisation of resources and effective monitoring thereof and compliance with applicable laws. Thesystem is continuously reinforced with analysis of data to strengthen it to meet the changing requirements.

The system comprises well defined organisation structure, pre-identified authority levels and documented policy guidelinesand manuals for delegation of authority.

A qualified and independent Audit Committee of the Board of Directors reviews the internal audit reports and the adequacyof internal controls.

Human Resources

CMC provides a synergistic work culture allowing its employees an open knowledge sharing environment.

The structural changes brought into place by the Company provide greater delivery excellence, bringing focus and will alsohelp in optimization of manpower utilization.

The three fold focus of the previous year continues in its execution of improving per person productivity through improvedutilization by managing a good balance between regular and outsourced person power, moving focus from low realizationprojects to higher realization International projects.

The major thrust continues in the effort to bring about measurable change in training coverage and effectiveness, increasingthe Learning and Development opportunities for every staff member. Greater thrust has been given to employee engagementactivities during the current year.

Key HR processes have been automated to improve productivity and ensuring better control on operations.

The staff strength of the Company as on 31st March, 2008 was 5239 (including employees on contract) as compared to 5054as on 31st March, 2007.

Cautionary StatementStatements in the Management Discussion and Analysis describing the Company’s objectives, expectations or predictionsmay be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materiallyfrom those expressed in the statement. Important factors that could influence the Company’s operations include change inGovernment regulations, tax laws, economic & political developments within and outside the country and such other factors.

CMC Limited


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CORPORATE GOVERNANCE REPORT

Company’s philosophy on Corporate Governance

As part of the Tata Group, CMC’s philosophy on Corporate Governance is founded upon a rich legacy of fair and transparent governancepractices. The Corporate Governance philosophy has been further strengthened with the adoption of the Tata Business Excellence Modeland Tata Code of Conduct and the adoption of the requirements under Clause 49 of the Listing Agreement with the Stock Exchanges.

I. Board of Directors

(A) Composition of Board

The present Board consists of one Executive Director and six Non-Executive Directors. The Non-Executive Directors with their diverseknowledge, experience and expertise brings in their independent judgment to the deliberations and decisions of the Board. Apart from thesitting fees paid for attending Board/Committee Meetings, the Non-Executive Directors did not have any material pecuniary relationship ortransactions with the Company during the year 2007-08.

The Company has a Non-Executive Chairman. The Company is having four Independent Directors which is more than one-third of the totalnumber of Directors. The Company meets the requirement relating to the composition of Board of Directors.

(B) Non-Executive Directors’ compensation and disclosures

The Non-Executive Directors including Independent Directors are paid sitting fee as fixed by the Board of Directors.

The Non-Executive Directors including Independent Directors are also proposed to be paid a commission. The approval of the shareholderswith regard to the payment of commission to the Non-Executive directors is being sought at the ensuing Annual General Meeting of theCompany. No stock options were granted to Non-Executive Directors or Independent Directors during the year under review.

(C) Other provisions as to Board and Committees

During the year 2007-08, six meetings of the Board of Directors were held on April 14, July 13, October 13, November 19 in 2007, on January14 and March 11 in 2008. The Board also approved Resolutions by circulation during the year.

The 31st Annual General Meeting of your Company was held on June 25, 2007.

None of the Directors of the Board serve as Members of more than 10 Committees nor do they Chair more than 5 Committees, as per therequirements of the Listing Agreement.

Detailed information is given in the table:

Name Category Board Attendance No. of outside No. of Committees No. ofMeetings at the Directorships* and Sharesattended AGM held Positions held held

during the on 25.06.2007 Member Chairmanyear

Mr S Ramadorai Non-Independent (Chairman) Non-Executive 06 Yes 11 03 01 NIL

Mr R Ramanan Non-IndependentExecutive 06 Yes 01 01 - NIL

Mr Ishaat Hussain Non-IndependentNon-Executive 06 Yes 13 06 04 NIL

Dr KRS Murthy IndependentNon-Executive 06 Yes 02 01 01 NIL

Mr Shardul Shroff IndependentNon-Executive 02 No 06 04 - NIL

Mr Surendra Singh IndependentNon-Executive 04 No 06 04 03 NIL

Mr C B Bhave Independent(upto 14-02-08) Non-Executive 03 Yes - - - NIL

Ms Kalpana Morparia Independent(from 11-03-08) Non-Executive - - 06 03 - NIL

*This does not include directorships in Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956.

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(D) Code of Conduct

(i) The Board of Directors has laid down Code of Conduct for all Board Members and Senior Management of the Company. The copies ofCode of Conduct as applicable to the Directors as well as Senior Management of the Company are uploaded on the website of theCompany – www.cmcltd.com.

(ii) The Members of the Board of Directors and Senior Management personnel have affirmed the compliance with the Code applicable tothem during the year ended March 31, 2008. The Annual Report of the Company contains a Certificate by the Managing Director &CEO in this regard.

II. Audit Committee

(A) Qualified and Independent Audit Committee

The Company complies with the provisions of Section 292A of the Companies Act, 1956 as well as requirements under the listingagreement pertaining to the Audit Committee. Its functioning is as under:

(i) The Audit Committee consists of the three Non-Executive Directors, out of which two are Independent Directors.

(ii) All members of the Committee are financially literate and one of the members, Mr Surendra Singh, is having the requisite financialmanagement expertise.

(iii) The Chairman of the Audit Committee is an Independent Director.

(iv) The Chairman of the Audit Committee was present at the last Annual General Meeting.

(v) The Chief Financial Officer, Addl. General Manager – Corporate Finance & Accounts, Internal Auditors and the representatives ofthe Statutory Auditors and such other officials of the Company are invited to attend the Audit Committee meetings as and whenrequired.

(vi) The Company Secretary acts as the Secretary to the Committee.

(B) Meeting of Audit Committee

During the year, 8 Audit Committee meetings were held on April 14, June 11, July 13, September 05, October 12 and December 05 in2007, on January 14 and March 11 in 2008. The Audit Committee meetings are held both at Corporate Office and other locations.

The composition of the Audit Committee and number of meetings attended by the Members are given below:

Name of Member Composition of the Audit Committee Number of meetings attended

Dr KRS Murthy Independent Director 8

Mr CB Bhave Independent Director 6

(upto 14-02-08)

Mr Surendra Singh Independent Director 7

Mr S Ramadorai Non-Executive Director 1

(from 28-02-08)

The Chairman of the Committee is Dr KRS Murthy.Two Members were present in all the meetings of the Audit Committee.

(C) Terms of reference

Apart from all the matters provided in Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956, the terms ofreference of the Audit Committee include:

1. Management discussion and analysis of financial condition and results of operations of the Company.

2. Statement of related party transactions.

3. The reports of Statutory Auditors.

4. The appointment of Internal Auditors, reviewing Internal Audit Reports and weaknesses of Internal Control.

5. Reviewing Internal Audit Programme.

6. All major contracts entered into with various parties.

The Minutes of the Audit Committee are being circulated to the Board of Directors.

CMC Limited


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III. Subsidiary Companies

(i) The Company does not have any non listed Indian Subsidiary Company.

(ii) The financial statements of the unlisted Subsidiary Company were put up at the Board Meetings of the Holding Company.

IV. Disclosures

(A) Basis of related party transactions

(i) The statements containing the transactions with related parties were submitted periodically to the Audit Committee.

(ii) There are no related party transactions that may have potential conflict with the interest of the Company at large.

(iii) There is no non-compliance by the Company and no penalties, strictures imposed on the Company by Stock Exchange or SEBI orany statutory authority, on any matter related to capital market, during the last three years.

(iv) The Company is maintaining Whistle Blower Policy in the Company and no personnel has been denied access to the AuditCommittee.

(B) Remuneration Committee

The Company is having a Remuneration Committee consisting of Non-Executive Directors, with the Chairman being an IndependentDirector.

The scope and function of the Remuneration Committee is to consider all payments to Directors and employees of the Company.

The members of the Remuneration Committee are as follows:

- Dr KRS Murthy - Chairman- Mr S Ramadorai- Mr Surendra Singh- Mr C B Bhave

(upto 14-02-08)During the year, one meeting was held on June 25, 2007 and all Members except Mr Surendra Singh attended the meeting.

(C) Remuneration of Directors

(i) Executive Director

(a) The remuneration of the Executive Directors is decided by the Remuneration Committee and recommended to the Board ofDirectors based on criteria such as industry benchmarks, the Company’s performance vis-à-vis the industry, performancetrack record of the Executive Director/appointee(s). The Company pays remuneration by way of salary, perquisites andallowances consisting of fixed and variable components.

(b) Mr R Ramanan is working as the Managing Director & Chief Executive Officer of the Company.

(c) The salary, bonus, benefits and perquisites paid to Mr R Ramanan, Managing Director & CEO during the year 2007-08, was

Rs. 60 Lacs.

(ii) Non-Executive Directors

The Non-Executive Directors are entitled to sitting fee for attending the Board/Committee Meetings. A sitting fee of Rs. 10,000 permeeting of the Board, Audit and Remuneration Committee and Rs. 5,000 per meeting of the Share Transfer-cum-ShareholdersGrievance Committee and other Committees is paid to them for attending such meetings.

(a) Payment of sitting fee to Non-Executive Directors for the year ended March 31, 2008:

Name of Director Sitting Fee paid (Rs.)

Mr S Ramadorai 90,000Mr Ishaat Hussain 65,000Dr KRS Murthy 1,55,000Mr Surendra Singh 2,20,000Mr Shardul Shroff 1,05,000Mr CB Bhave 1,00,000(upto 14-02-08)

25

The Non-Executive Directors including Independent Directors are also considered for payment of commission up to 1% of thenet profit of the Company. The Board considered the performance of the Non-Executive Directors and recommended the followingcommission to the Independent Directors subject to approval of members at the ensuing Annual General Meeting:

Name of Director Commission (Rs.)

Dr KRS Murthy 5,00,000Mr Surendra Singh 5,00,000Mr CB Bhave 5,00,000Mr Shardul Shroff 3,00,000

(b) The Non-Executive Directors have disclosed that they do not hold any shares and/or convertible instruments in the Company.(c) Ms Kalpana Morparia has been appointed as an Independent Director (Non-Executive) on the Board of Directors of the

Company during the year under review.(d) There has been no pecuniary relationship or transactions of the Non-Executive Directors vis-à-vis the Company during the

year under review.

(D) Management

The Management Discussion and Analysis Report has been included separately in the Annual Report to the Shareholders.

(E) Shareholders

(i) Dr KRS Murthy and Mr Shardul Shroff are retiring from the Board by rotation at the Annual General Meeting and, being eligible,offer themselves for re-election as Non-Executive Directors. The brief resume and other details of these Directors are given separatelyin the Annual Report.

(ii) Ms Kalpana Morparia has been appointed on the Board of the Company with effect from March 11, 2008 as an Additional Directorand her appointment as a Director of the Company has been included in the Agenda item of the forthcoming Annual GeneralMeeting. Her brief resume and other details are included elsewhere in the Annual Report.

(iii) The quarterly results and presentations made by the Company to analysts are put on the Company’s website – www.cmcltd.com

(iv) Share Transfer-cum-Shareholders Grievance Committee

The Share Transfer-cum-Shareholders Grievance Committee is constituted under the Chairmanship of a Non-Executive Directorto consider and approve various requests for transfer, sub-division, consolidation, renewal, exchange, issue of new Certificates inreplacement of old ones and redressal of grievances of the Shareholders as may be received from time to time.

The present composition of the Share Transfer-cum-Shareholders Grievance Committee is as under:

Mr Surendra Singh .. ChairmanMr R Ramanan .. MemberMr Shardul Shroff .. MemberMr Vivek Agarwal .. Member

The Committee has had 22 Meetings during the year ended March 31, 2008.

Mr Vivek Agarwal, Company Secretary & Head - Legal, is the Compliance Officer and can be contacted at:

CMC Limited Tel: 91-11-23736151PTI Building, 5th Floor Fax: 91-11-237361594, Sansad Marg E-mail: [email protected] Delhi-110001

In addition to the above e-mail of the Compliance Officer, the Investors/Shareholders can also lodge their complaints, if any, [email protected]

51 investors’ complaints/queries were received during the year under review and no complaints/queries were pending as on

March 31, 2008.

(v) The Board of Directors of the Company has delegated the power of share transfer to the Share Transfer-cum-Shareholders GrievanceCommittee and the Registrar and Share Transfer Agents. The meetings of the Share Transfer-cum-Shareholders GrievanceCommittee to attend to share transfer formalities are held on quarterly basis generally.

CMC Limited


26

V. Report on Corporate Governance

The quarterly compliance report has been submitted to the Stock Exchanges where the Company’s equity shares are listed in therequisite format duly signed by the Compliance Officer.

The other information on Corporate Governance for the benefits of shareholders is as under:

GENERAL BODY MEETINGS

Location and time of General Meetings held in the last 3 years:

Year Type Date Venue Time Whether anySpecial Resolution

passed in previous AGM

2005 AGM 17.06.2005 Bhartiya Vidya Bhavan Auditorium, 2.30 p.m. NoBVB Hyderabad Kendra No. 5-9-1105,

Basheerbagh-King Koti Road,Hyderabad – 500 029, A.P.

2006 AGM 27.06.2006 - do - 2.30 p.m. No

2007 AGM 25.06.2007 - do - 3.30 p.m. No

Whether Special Resolutions:

(a) Were put through postal ballot last year - No Details of voting pattern - N.A.Persons who conduct the postalballot exercise- - N.A.

(b) Are proposed to be conducted through - Nopostal ballot –

Means of Communication:

Quarterly report sent to each household : The results of the Company are published in theof shareholders. newspapers.

Quarterly results and in which newspaper : Results are published in Business Standard /Business Linenormally published in. and in Eenadu Andhra Prabha (Telugu – Hyderabad edition).

Any website where displayed. : Yes, the results are displayed on the Company’s website www.cmcltd.com

Whether it also displays official news releases : Yes

Whether the website displays the presentation : Yes, the Company holds a conference call with Analysts and Institutionalmade to the institutional investors and to Investors after the quarterly, half yearly and annual financial results havethe analysts. been approved by the Board of Directors, where information is disseminated

and analysed.

General Shareholder Information

Annual General Meeting:

(i) Date, time and Venue : Tuesday, June 24, 2008 at 3.30 p.m.Bhartiya Vidya Bhavan AuditoriumBasheerbaghHyderabad-500029

(ii) Financial year : 1st April to 31st March

(iii) Date of Book Closure : Wednesday, June 18, 2008 to Tuesday, June 24, 2008(both days inclusive)

(iv) Dividend Payment Date : The dividend warrants will be posted on or before July 23, 2008.

27

(v) Listing

The Stock Exchanges on which the Company’s shares are listed:

Bombay Stock The Calcutta Stock The National Stock Exchange of India Ltd.Exchange Limited, Exchange Association Ltd. Exchange Plaza, 5th FloorPhiroze Jeejeebhoy 7, Lyons Range Plot No.C/1, G BlockTowers Kolkata-700 001 Bandra-Kurla ComplexDalal Street Bandra (E), Mumbai-400051Mumbai-400 001

(vi) Stock Code

Bombay Stock Exchange Limited : 517326The National Stock Exchange of India Ltd. : CMC

(vii) Market price information

The reported high and low closing prices during the year ended March 31, 2008 on the National Stock Exchange and the BombayStock Exchange, where your Company’s shares are frequently traded, are given below:

National Stock Exchange Bombay Stock ExchangeMonth High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

Apr-07 1302.90 1090.00 1305.00 1086.00May-07 1290.60 1063.70 1257.00 1100.00Jun-07 1244.90 1106.00 1239.70 1116.15Jul-07 1561.50 1082.00 1550.00 1090.00Aug-07 1125.00 961.00 1149.00 965.00Sept-07 1185.00 940.50 1179.90 952.10Oct-07 1100.00 900.00 1085.30 900.00Nov-07 1150.00 897.20 1090.00 930.00Dec-07 1434.80 960.00 1464.00 972.00Jan-08 1524.00 505.10 1520.00 528.00Feb-08 940.10 703.00 939.00 720.25Mar-08 924.90 705.25 924.00 730.00

(viii) Performance in Comparison to BSE SensexThe performance of the Company’s scrip on the BSE as compared to the Sensex is as under:

BSE Sensex CMC LIMITEDMonth High Low High (Rs.) Low (Rs.)

Apr-07 14383.72 12425.52 1305.00 1086.00May-07 14576.37 13554.34 1257.00 1100.00Jun-07 14683.36 13946.99 1239.70 1116.15Jul-07 15868.85 14638.88 1550.00 1090.00Aug-07 15542.40 13779.88 1149.00 965.00Sept-07 17361.47 15323.05 1179.90 952.10Oct-07 20238.16 17144.58 1085.30 900.00Nov-07 20204.21 18182.83 1090.00 930.00Dec-07 20498.11 18886.40 1464.00 972.00Jan-08 21206.77 15332.42 1520.00 528.00Feb-08 18895.34 16457.74 939.00 720.25Mar-08 17227.56 14677.24 924.00 730.00

CMC Limited


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(ix) Registrars and Share Transfer Agents

The Members are requested to correspond with the Company’s Registrar & Share Transfer Agents – M/s Karvy Computershare PrivateLimited quoting their folio number at the following address:

M/s Karvy Computershare Private LimitedKarvy House, 46, Avenue 4, Street No. 1,Banjara Hills, Hyderabad 500 034Tel: 040- 23312454/23320251Fax: 040-23311968

Email: [email protected]

(x) Share Transfer System

Shares lodged for transfer at the Registrar’s address are normally processed and approved by Share Transfer-cum-ShareholdersGrievance Committee on a fortnight basis. All requests for dematerialisation of shares are processed and the confirmation is given tothe Depositories within 15 days. Grievances received from Members and other miscellaneous correspondence on change of address,mandates etc. are processed by the Registrar within 30 days.

(xi) Distribution of shareholding

(a) Distribution of shareholding (no of shares) as on March 31, 2008:

No. of shares No. of % of Total no. of % of holdingshareholders shareholders shares

1-500 31877 98.99 769735 5.08501-1000 144 0.45 111498 0.741001-2000 71 0.22 105539 0.692001-3000 23 0.07 58928 0.393001-4000 14 0.04 48985 0.324001-5000 11 0.04 51641 0.345001-10000 16 0.05 123915 0.8210001 & above 44 0.14 13879759 91.62Total 32200 100 15150000 100Physical Mode 64 0.20 9328 0.06

Electronic Mode 32136 99.80 15140672 99.94

(b) Shareholding pattern as on March 31, 2008:

Category No. of shares % of issuedheld share capital

Promoter-Tata Consultancy Services Limited. 7744961 51.12Mutual Funds and UTI 1760574 11.62Banks 2550 0.02Financial Institutions / Insurance Companies 1719558 11.35FIIs 2222336 14.67NRIs/Foreign Nationals 69801 0.46Private Bodies Corporates 343669 2.27Indian Public 1286551 8.49Total 15150000 100.00

The authorized and paid-up capital of your Company are Rs. 35 crores and Rs.15.15 crores, respectively. The Company has not changedits share capital (due to rights, bonus, preferential issue, IPO, buyback, capital reduction, amalgamation, de-merger etc.) during theyear under review.

29

(c) Top ten Shareholders as on March 31, 2008:

Category Name No. of shares Percentage

Promoter Tata Consultancy Services Limited 7744961 51.12Mutual Fund HDFC Trustee Company Ltd – HDFC Equity Fund 1000000 6.60FII Aberdeen Asset Managers Limited A/c Aberdeen International 960000 6.34Ins. Co. Life Insurance Corporation of India 884875 5.84Ins. Co. General Insurance Corporation of India 406941 2.69FII Citi Group Global Markets Mauritius Private Limited 283741 1.87Mutual Fund HDFC Trustee Company Ltd – HDFC Top 200 Fund 235584 1.56FII Merill Lynch Capital Market ESPANA S.A.S.V. 224797 1.48Ins. Co. Fidelity Trustee Company Private Limited 199556 1.32 FII Swiss Finance Corporation (Mauritius) Limited 184196 1.22Ins. Co. The New India Assurance Company Ltd. 184131 1.22FII Goldman Sachs Investments (Mauritius) I Ltd. 183015 1.21

(xii) Dematerialisation of shares and liquidity99.94% of the equity shares have been dematerialised by about 99.80% of the total shareholders as on March 31, 2008. The Company’sshares can be traded only in dematerialised form as per SEBI notification. The Company has entered into Agreement with NSDL andCDSL whereby shareholders have the option to dematerialise their shares with either of the depositories. Equity shares are activelytraded in BSE and NSE.

(xiii) Outstandings GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity

The Company has not issued any GDRs/ADRs/Warrants or any convertible instruments.

(xiv) Plant locationsYour Company is not a manufacturing unit and thus not having any Plant. However, our offices are located in almost all metropolitancities in India.

(xv) Address for correspondenceThe Company Secretary & Head - LegalCMC LimitedPTI Building, 5th Floor4, Sansad MargNew Delhi-110001Tel..: 91-11-23736151-58Fax : 91-11-23736159Email: [email protected]

(xvi) Electronic Clearing Service (ECS)The Company is availing of the ECS facility to distribute dividend to those Members who have opted for it, through the ECS facility inmetropolitan cities.

NON-MANDATORY REQUIREMENTS(a) Ethics & Compliance Committee

The Company also has an Ethics and Compliance Committee for the following purpose:- Set forth the policies relating to and oversee the implementation of the code of conduct for prevention of insider trading and code

of corporate disclosure practices.- Take on record the status reports prepared by the compliance officer dealing in securities by the specified persons on monthly

basis.- Decide penal action in respect of violation of the SEBI Regulations/code by any specified person.During the year, one meeting of the Ethics and Compliance Committee was held on July 27, 2007.

The composition of the Ethics and Compliance Committee is given below:

Mr Surendra Singh ChairmanMr R Ramanan MemberMr Shardul Shroff MemberMr Vivek Agarwal, MemberCompany Secretary & Head - Legal

CMC Limited


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(b) Executive Committee

The Company has an Executive Committee. The objectives and role of Executive Committee are as follows:

- Long term financial projections and cash flows.

- Capital and Revenue Budgets and Capital Expenditure Programs.

- Acquisitions, divestment and business restructuring proposals.

- Senior management succession planning.

- Any other item as may be decided by the Board.

During the year, one Executive Committee meeting was held on March 11, 2008.

The composition of the Executive Committee is given below:

Mr S Ramadorai ChairmanMr R Ramanan MemberMr Ishaat Hussain MemberDr K R S Murthy MemberMr C B Bhave Member(upto14-02-2008)Ms Kalpana Morparia Member(from 11-03-08)

(c) Nomination Committee

The Company has a Nomination Committee. The objectives of the Committee are to identify the Independent Directors and torefresh the composition of the Board from time to time.

During the year, one Nomination Committee meeting was held on March 11, 2008.

The composition of the Nomination Committee is as under:

Mr Surendra Singh ChairmanMr S Ramadorai MemberMr R Ramanan MemberMr C B Bhave Member(upto 14-02-08)Mr Shardul Shroff Member(from 28-02-08)

(d) Whistle Blower Policy

Your Company has established a mechanism called ‘Whistle Blower Policy’ for employees to report to the management instancesof unethical behavior, actual or suspected, fraud or violation of the Company’s code of conduct or ethics policy.

31

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIORMANAGEMENT PERSONNEL WITH THE COMPANY’S CODE OF CONDUCT

This is to certify that the Company has laid down Code of Conduct for all Board Members and Senior Management of theCompany and the copies of the same are uploaded on the website of the Company – www.cmcltd.com.

Further certified that the Members of the Board of Directors and Senior Management personnel have affirmed having compliedwith the Code applicable to them during the year ended March 31, 2008.

New Delhi R RAMANANApril 17, 2008 MANAGING DIRECTOR & CEO

CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

TO THE MEMBERS OFCMC LIMITED

We have examined all relevant records of CMC Limited (the Company) for the purpose of certifying of the conditions of theCorporate Governance under Clause 49 of the Listing Agreement with Stock Exchanges for the financial year ended 31st

March, 2008. We have obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of certification.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of theCompany nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

On the basis of our examination of the records produced, explanations and information furnished, we certify that the Companyhas complied with the conditions of Clause 49 of the Listing Agreement.

Chandrasekaran AssociatesCompany Secretaries

Dr S ChandrasekaranNew Delhi Senior PartnerApril 17, 2008 (Membership No. FCS 1644, CP 715)

CMC Limited


32

AUDITORS’ REPORT

TO THE MEMBERS OFCMC LIMITED

1. We have audited the attached Balance Sheet of CMC Limited, as at 31 March, 2008, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility ofthe Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) ofsection 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of thesaid Order.

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

a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for thepurposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examinationof those books;

c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount;

d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors, as at 31 March, 2008, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as at 31 March, 2008, from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f ) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2008;ii. in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; andiii. in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For S.B. BILLIMORIA & CO.Chartered Accountants

New Delhi JITENDRA AGARWAL17 April, 2008 Partner

(Membership No. 87104)

33

ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report of even date)

i. a. The Company has maintained proper records showing full particulars, including quantitative details and situationof fixed assets.

b. The Company has a programme of physically verifying its fixed assets in a phased manner designed to cover allassets over a period of two years, which in our opinion is reasonable having regard to the size of the Company andthe nature of its business. In accordance with this programme, the Management had carried out a physical verificationof fixed assets at some locations during the year. The discrepancies noticed on such verification were not materialand these have been properly adjusted in the books of account.

c. The Company has not disposed off substantial part of its fixed assets during the year.

ii. a. As explained to us, inventory in the Company’s possession has been verified by the Management during the year atreasonable intervals. For materials lying with third parties or at customers’ sites aggregating to Rs. (000s) 73,927 inthe absence of confirmations from such parties, we have relied on certification from the respective Project Managers.

b. In our opinion, the procedures of physical verification of inventories followed by the Management are reasonableand adequate in relation to the size of the Company and the nature of its business.

c. In our opinion, the Company has maintained proper inventory records. The discrepancies noticed between thephysical stocks and book records were not material and the same have been properly dealt with in the books ofaccount.

iii. The Company has not granted or taken any loans, secured or unsecured, to or from companies, firms or other partieslisted in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause4(iii) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there is adequate internal control systemcommensurate with the size of the Company and the nature of its business for the purchase of inventory and fixedassets and for the sale of goods and services.

v. Based on the examination of the books of account and related records and according to the information and explanationsprovided to us, there are no contracts or arrangements with companies, firms or other parties which need to be listed inthe register maintained under Section 301 of the Companies Act, 1956.

vi. The Company has not accepted any deposits from the public, within the meaning of Sections 58A and 58AA or any otherrelevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

vii. In our opinion the Company has an adequate internal audit system commensurate with the size of the Company andnature of its business.

viii. According to the information and explanations given to us, the Central Government has not prescribed maintenance ofcost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for the Company.

ix. According to the information and explanations given to us and the records of the Company examined by us:

a. the Company has generally deposited its statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty and Cess within theprescribed time with the appropriate authorities during the year and that there are no undisputed amounts payablein respect of these dues which have remained outstanding as at 31st March, 2008 for a period of more than sixmonths from the date they became payable. The Company’s operations do not give rise to any Excise Duty.

CMC Limited


34

b. dues of Income Tax, Sales Tax, Works Contract Tax and Service Tax aggregating to Rs. (000s) 64,167 have not beendeposited on account of various disputes as set out in the attachment. We have been further informed that thereare no dues in respect of Customs Duty, Wealth Tax and Cess which have not been deposited on account of anydispute. The Company’s operations do not give rise to any Excise Duty.

x. The Company does not have any accumulated losses nor has incurred any cash losses during the current and theimmediately preceding financial year.

xi. Based on the examination of the books of account and related records and according to the information and explanationsprovided to us, the Company has not defaulted in repayment of dues to the banks. The Company has not taken anyloans from financial institutions nor has it issued any debentures.

xii. According to the information and explanations given to us, the Company has not granted loans and advances on thebasis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii)of the Order are not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to the Company is not dealing in shares, securitiesand debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable tothe Company.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans takenby others from banks or financial institutions.

xvi. According to the information and explanations given to us and the records of the Company examined by us, the termloan obtained by the Company during the year has been applied for the purpose for which the loan was obtained.

xvii. According to the information and explanations given to us, and on an overall examination of the Balance Sheet of theCompany, funds raised on short term basis have prima facie, not been utilised for long term investment.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment ofshares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. According to the information and explanations given to us, the Company has not issued any debentures during theperiod covered by our report. Accordingly, the provisions of clause (xix) of the Order are not applicable to the Company.

xx. The Company has not raised any money by way of public issues during the year.

xxi. According to the information and explanations given to us and to the best of our knowledge and belief, no fraud on orby the Company has been noticed or reported during the year.




35

ATTACHMENT(Referred to in paragraph ix b. of Annexure to the Auditors’ Report)

Information pursuant to clause 4(ix)(b) of Companies (Auditor’s Report) Order, 2003 in respect of dues disputed, not depositedwith various authorities.

Nature of Dues Amount Financial Forum where(Rs./000s) Year/Period the dispute is pending

Income Tax

A. Mumbai 2,425 2000-01 Commissioner of2,425 Income Tax

Sales Tax

A. West Bengali. Tax demand on disallowance of credit for Tax Deducted at 2,571 1997-98 West Bengal Commercial

Source (TDS), concessional sales tax forms and set off of to 2002-03 Taxes Appellate &amount of tax paid to sub-contractors Revisional Board

ii. Tax demand imposed on enhancement of turnover 1,288 2003-04 Deputy Commissioner -Commercial Taxes

iii. Exparte assessment made by Deputy Commissioner 3,089 2004-05 Deputy Commissioner -Commercial Taxes

6,948B. Bihar

i. Tax demand and penalty imposed on enhancement of 3,919 1990-91 Commercial Taxesturnover during assessment and delay in filing of return. to 1992-93 Tribunal

3,919C. Madhya Pradesh

i. Tax demand and penalty imposed on enhancement of turnover. 288 1987-88 High Courtii. Tax demand imposed on enhancement of turnover. 595 2002-03 & Deputy Commissioner

2003-04 Appellate Unit

883D. Orissa

i. Tax demand on disallowance of claim of service charges & 384 1994-95, Assistant Commissionerof sales tax deducted at source. 2001-2002 & of Sales Tax

2002-03ii. Tax demand on disallowance of claim of service & labour charges. 809 1995-96,

1999-2000 & Sales Tax Tribunal2000-01

1,193E. Uttar Pradesh

i. Tax demand on inter state sales deemed as intra state sales. 364 1994-95 Sales Tax Tribunalii. Tax demand on disallowance of non-taxable turnover. 38 1996-97 Deputy Commissioner – Appealsiii. Tax demand on disallowance of credit for TDS and tax 287 2002-03 Assessing Authority

deposited through challans.iv. Tax demand on disallowance of exempted turnover. 1,195 2004-05 Deputy Commissioner – Appeals

1,884F. Tamil Nadu

i. Tax demand imposed on enhancement of turnover. 416 1999-00 Deputy Commissionerii. Tax demand imposed on enhancement of turnover. 112 1994-95 & Commercial Tax Officer

1998-99iii. Additional demand raised by the Assessing Officer 651 1994-95 Madras High Court

towards tax on notional gross profit.iv. Tax demand imposed on enhancement of turnover. 5,283 1993-94, 95-96, Appellate Assistant

97-98, 2003-04 Commissionerand 2004-05

6,462

G. Andhra PradeshTax demand sales assessed as Works Contract. 35,001 2001-02 to Deputy Commissioner - Appellate

2003-0435,001

Works Contract Tax

A. Delhii. Tax demand on disallowance of input credit. 52 1999-00 Assessing Authorityii. Tax demand on recomputation of gross turnover on the

basis of tax deducted at source-certificates furnished. 3,655 2002-03 Assessing Authority

Total 3,707

Service Tax

A. Andhra Pradeshi. Demand of service tax on election photo ID cards 1,745 2002-03 High Court of Andhra Pradesh

1,745

Grand Total 64,167

CMC Limited

36


BALANCE SHEET AS AT 31 MARCH, 2008

Schedule As at As atRef. 31.3.08 31.3.07

Rs./000s Rs./000s

SOURCES OF FUNDS

1. Shareholders’ Funds(a) Share Capital 1 151,500 151,500(b) Reserves & Surplus 2 2,883,804 2,170,859

3,035,304 2,322,359

2. LOAN FUNDS(a) Secured Loans 3 - 177,556(b) Unsecured Loans 4 289,345 -

289,345 177,556

3,324,649 2,499,915

APPLICATION OF FUNDS

3. FIXED ASSETS 5(a) Gross Block 1,450,420 1,298,516(b) Less:Depreciation 765,619 750,077

(c) Net Block 684,801 548,439

(d) Capital Work in Progress 162,709 282,178

4. INVESTMENTS 6 1,038,098 81,801

5. DEFERRED TAX ASSETS (See note 17) 36,088 42,104

6. CURRENT ASSETS, LOANS & ADVANCES(a) Inventories 7 198,687 230,651(b) Sundry debtors 8 2,235,268 2,416,659(c) Unbilled revenues 1,099,459 1,181,304(d) Cash and bank balances 9 234,240 360,782(e) Loans and advances 10 933,270 847,776

4,700,924 5,037,1727. LESS : CURRENT LIABILITIES AND PROVISIONS 11

(a) Current Liabilities 2,683,702 2,911,007(b) Provisions 614,269 580,772

3,297,971 3,491,779

8. NET CURRENT ASSETS 1,402,953 1,545,393

3,324,649 2,499,915Notes forming part of the financial statements 16

As per our report of even date attached For and on behalf of the Board

For S B Billimoria & Co S Ramadorai R Ramanan Dr K R S MurthyChartered Accountants Chairman Managing Director & CEO

Jitendra Agarwal J K Gupta Vivek Agarwalsain S Singh S ShroffPartner Chief Financial Officer Company Secretary & Head-Legal Director DirectorMembership No. 87104

New Delhi New Delhi17 April, 2008 17 April, 2008

37

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2008

Schedule Year ended Year endedRef. 31.3.08 31.3.07

Rs./000s Rs./000s

INCOME1. Sales and Services 12 9,771,947 9,889,1482. Other Income 13 118,957 54,889

9,890,904 9,944,037EXPENDITURE3. Operating and other Expenses 14 8,637,447 8,975,8414. Depreciation 5 78,690 82,4295. Interest(net) 15 3,623 37,032

8,719,760 9,095,302

PROFIT BEFORE TAX 1,171,144 848,7356. Provision for taxes

– Current income tax 272,769 177,992– Deferred income tax 1,391 10,898– Fringe Benefit Tax (FBT) 14,749 18,855

PROFIT AFTER TAX 882,235 640,9907. Balance brought forward from

Previous year 2,106,213 1,749,686

8. Adjustment for increase in opening provision for retirement benefits - (78,566)

2,106,213 1,671,120

AMOUNT AVAILABLE FOR APPROPRIATIONS 2,988,448 2,312,1109. APPROPRIATIONS

(a) General Reserve 88,224 64,099(b) Proposed Dividend 166,650 121,200(c) Tax on Proposed Dividend 28,322 20,598

(d) Balance carried to Balance Sheet 2,705,252 2,106,213

Basic and diluted Earnings Per Share (Rupees) (See note 20) 58.23 42.31

Notes forming part of the financial statements 16





CMC Limited

38


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2008Year ended Year ended

31.3.08 31.3.07

Rs./000s Rs./000s Rs./000sA. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 1,171,144 848,735Adjustments for :

Depreciation 78,690 82,429Interest expense 10,403 39,619Dividend from mutual fund (11,844) -(Profit)/ Loss on sale of fixed assets 104 2,133Bad debts/ advances written off (net) 113,864 191,418Unclaimed balances/ provisions written back (90,752) (13,555)Fixed assets written off 1,172 2,120Provision for doubtful debts 2,581 1,174Unrealised Foreign exchange loss/ (gain) (4,621) 6,707Transfer from capital reserve (2) (895)

99,595 311,150

Operating profit before working capital changes 1,270,739 1,159,885Adjustments for :

Trade and other receivables 487,726 (121,112)Inventories 31,964 292,945Trade payables and other liabilities (465,749) 400,765

Cash generated from operations 1,324,680 1,732,483Direct taxes paid/ deducted at source (415,541) (260,622)

NET CASH FROM/(USED) IN OPERATING ACTIVITIES (A) 909,139 1,471,861

B. CASH FLOW FROM INVESTING ACTIVITIESDividend from mutual fund 11,844 -Purchase of fixed assets (88,348) (359,265)

Sale of fixed assets 753 7,274

NET CASH FROM/(USED) IN INVESTING ACTIVITIES (B) (75,751) (351,991)

C. CASH FLOW FROM FINANCING ACTIVITIESInterest paid (3,584) (39,915)Proceeds/(Payment) of short term borrowings (177,556) (493,123)Proceeds/(Payment) of long term borrowings 289,345 -Dividend paid (including dividend tax) (141,798) (86,374)

NET CASH FROM (USED) IN FINANCING ACTIVITIES (C) (33,593) (619,412)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) 799,795 500,458

Cash and cash equivalents as on 1 April, 2007 [Excluding unrealised exchange difference of Rs. (‘000s) 1,398] 359,384 263,832

Add/(Less) : Reversal/Transitional provisions as per AS-15 not affecting Cash Flow 30,309 (404,906)

CASH AND CASH EQUIVALENTS AS ON 31 MARCH, 2008[Excluding unrealised exchange difference of Rs. (‘000s) 1,049] 1,189,488 359,384(Including short term investments Rs. ‘(000s) 956,297 )





39

SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at31.3.08 31.3.07

Rs./000s Rs./000s

Schedule 1 : SHARE CAPITAL

Authorised[35,000,000 (Previous year 35,000,000) equity sharesof Rs. 10 each] 350,000 350,000

Issued, Subscribed and Paid up15,150,000 (Previous year 15,150,000) equity sharesof Rs. 10 each fully paid up 151,500 151,500

Of the above:7,744,961 (Previous year 7,744,961) equity shares are heldby Tata Consultancy Services Limited, the Holding Company.(See note 1)

Schedule 2 : RESERVES & SURPLUS

(a) Capital Reserve(Grants from Government of India)

(i) Opening balance 547 1,442(ii) Less: Transferred to Profit and Loss Account 2 895

(iii) Closing balance 545 547

(b) General Reserve(i) Opening balance 64,099 204,539(ii) Add: Transferred from Profit and Loss account 88,224 64,099

Adjustment for increase in opening provision for employee/retirement bebefits 25,684 —(iii) Less -Adjustment for increase in opening provision for employee benefits — 132,465

Adjustment for increase in opening provision for retirement bebefits — 72,074

(v) Closing balance 178,007 64,099

(c) Profit and Loss account 2,705,252 2,106,213

2,883,804 2,170,859

Note:

Pursuant to a revision /clarification issued in respect of Accounting Standard 15 “Employee Benefits” (AS-15) adjustments for increase/decrease in opening provisions for employee/retirement benefits have been routed through the General Reserve.

Schedule 3 : SECURED LOANS

From banksCash credit accounts — 27,556Short term loan — 150,000

— 177,556

Notes:1. Cash credits and short term loan from banks are secured by hypothecation of inventories, debtors and other current assets.2. Loans repayable within one year Rs. ‘(000s) Nil (Previous year Rs. ‘(000s) 150,000)

CMC Limited

40


As at As at31.3.08 31.3.07

Rs./000s Rs./000sSchedule 4 : UNSECURED LOANS

Long Term loan (from others) 289,345 —

Note:1. Loans repayable within one year Rs. ’(000s) 19,290 [Previous year Rs. ‘(000s) Nil]

Schedule 5 : FIXED ASSETS (see note 6)(Amounts in Rs./000s)

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deductions/ As at As at For the Deductions/ As at As at As at31.03.07 Adjustments 31.03.08 31.03.07 year Adjustments 31.03.08 31.03.08 31.03.07

(a) Land(i) Leasehold 59,615 — — 59,615 9,683 700 — 10,383 49,232 49,932(ii) Freehold 605 — — 605 — 605 605

(b) Buildings(i) Leasehold 16,167 — — 16,167 13,649 104 — 13,753 2,414 2,518(ii) Freehold 305,234 159,462 31 464,665 65,955 6,084 8 72,031 392,634 239,279

(c) Plant & Machinery(i) Computers 579,301 39,830 52,670 566,461 415,711 53,808 51,931 417,588 148,873 163,590(ii) Office and

other equipment 45,236 3,909 2,842 46,303 26,492 1,941 2,310 26,123 20,180 18,744(iii) Others 185,418 7,306 6,884 185,840 156,216 9,622 6,809 159,029 26,811 29,202

(d) Furniture & Fittings 101,086 5,806 2,070 104,822 59,519 5,913 1,521 63,911 40,911 41,567(e) Vehicles 5,854 770 682 5,942 2,852 518 569 2,801 3,141 3,002

TOTAL 1,298,516 217,083 65,179 1,450,420 750,077 78,690 63,148 765,619 684,801 548,439(f) Capital work-in-progress** 282,178 40,940 160,409 162,709 — — — — 162,709 282,178

GRAND TOTAL 1,580,694 258,023 225,588 1,613,129 750,077 78,690 63,148 765,619 847,510 830,617

Previous Year 1,313,478 360,061 92,845 1,580,694 748,170 82,429 80,522 750,077 830,617 565,308

* Additions to freehold buildings include interest capitalised amounting to Rs.’(000s) 2,274 (Previous year Rs. Nil)** Capital work-in-progress includes interest amounting to Rs. ’(000s) 6,992 (Previous year Rs. Nil)

No. of units Face value Description As at As at per unit 31.03.08 31.03.07

Rs./000s Rs./000sCURRENT INVESTMENT (UNQUOTED)Investments In Mutual Funds

5,135,925 10 ICICI Prudential Floating Rate Plan - Daily Dividend 51,370 —1,027,429 10 ING Mutual Fund Institutional - Daily Dividend 10,278 —7,027,042 10 Tata floater fund - Daily Dividend 70,521 —

50,088 1000 DSP Merrill Lynch Strategic Bond Fund 50,279 —11,126,747 10 Templeton FRIF Long Term Super Instt. 111,388 —

3,029,142 10 JM Money Manager Fund- Super Plus 30,304 —

Fixed Maturity Plan - Short Term

3,022,433 10 Tata Fixed Horizon Fund Series 17 - Schme D 30,224 —2,015,637 10 JM Interval Fund - Quarterly Plan 4 (JM QIF - 4) 20,156 —2,000,000 10 ICICI Prudential FMP -Series 39-16 Weeks Plan A 20,402 —7,031,308 10 DSP Merrill Lynch Liquid FMP -3 Months-Series 3 70,314 —5,031,795 10 JM Interval Fund - Quarterly Plan 6 (JM QIF - 6) 50,318 —

10,038,763 10 Tata Fixed Income Portfolio Fund - A2 100,491 —7,640,788 10 Tata Dynamic Bond Fund Option A 80,252 —

11,000,000 10 UTI Fixed Maturity Plan - HYFMP 110,000 —3,000,000 10 UTI Fixed Income Interval Fund 30,000 —1,998,981 10 Reliance Interval Fund 20,000 —5,000,000 10 ING Long Term FMP Ii (Growth Option) 50,000 —5,000,000 10 Kotak FMP 13M Series 4 (Growth Option) 50,000 —

956,297 —LONG-TERM, NON-TRADE INVESTMENTS (UNQUOTED)160,001,000 (Previous year 160,001,000) non-assessable shares ofUSD 0.01 each, fully paid up in CMC Americas Inc., USA, a wholly owned subsidiary 81,801 81,801

1,038,098 81,801

Schedule 6 : INVESTMENTS (at cost) (see note 23)

41

As at As at31.3.08 31.3.07

Rs./000s Rs./000s

Schedule 7 : INVENTORIES

(a) Finished goods - equipment for resale 162,216 197,697(b) Components/spares for maintenance and resale 19,043 21,171(c) Education and training material 12,640 10,005(d) Work-in-progress 4,788 1,778

198,687 230,651

Note: Finished goods include goods in transit Rs. ‘(000s) 8,505 (Previous year Rs. ‘(000s) 1,667)

Schedule 8 : SUNDRY DEBTORS

a. Over six months old (unsecured):Considered good 474,219 416,791Considered doubtful 212,031 209,451

686,250 626,242b. Others (unsecured):

Considered good 1,747,339 1,985,279

2,433,589 2,611,521Less: Provision for doubtful debts 212,031 209,451

2,221,558 2,402,070

c. Future lease installments receivable (unsecured) (See note 14b) 32,288 40,711Less: Unearned finance and service charges 18,578 26,122

13,710 14,589

2,235,268 2,416,659Notes:1. (i) Debtors include amounts due from a subsidiary company 166,724 202,744

(ii) Maximum balance outstanding during the year 202,744 220,682

2. (i) Debtors include amounts due from the holding company 764,928 833,152(ii) Maximum balance outstanding during the year 1,059,679 1,272,096

Schedule 9 : CASH AND BANK BALANCES

(a) Cash on hand [including stamps on hand 2,659 2,587Rs. ‘(000s) 18 (Previous year Rs. ‘(000s)16)]

(b) Cheques/demand drafts on hand 53,488 28,217(c) Balance with scheduled banks in:

(i) Current accounts 50,228 71,373(ii) Cash credit accounts 121,170 75,910(iii) Deposit accounts* 6,695 182,695

234,240 360,782

*includes Rs. ‘(000s) 1,195 on account of fixed deposits pledged with customers as security (Previous year Rs. ‘(000s) 1,195)

CMC Limited

42


As at As at31.3.08 31.3.07

Rs./000s Rs./000s

Schedule 10 : LOANS AND ADVANCES

(a) Advances recoverable in cash or in kind or 559,519 599,177for value to be received*

(b) Advance income tax and tax deducted at source 383,440 258,290[Net of Provision for tax Rs. ‘(000s) 1,386,705 {Previous yearRs. ‘(000s) 1,130,714} & FBT Rs. ‘(000s) 50,903{Previous year Rs. ‘(000s) 27,212}]

942,959 857,467(c) Less: Advances considered doubtful 9,689 9,691

933,270 847,776(d) Of the above, amounts :

(i) Fully secured 129,046 27,136(ii) Unsecured, considered good 804,224 820,640(iii) Considered doubtful 9,689 9,691

942,959 857,467Notes:1. Amounts due from directors — 1722. Maximum amounts due from directors during the year 450 172

* includes deposits with Customs, Octroi, Electricity Boards etc. 14,732 11,179

Schedule 11 : CURRENT LIABILITIES AND PROVISIONS

LIABILITIES(a) Sundry Creditors

i. Micro and Small Enterprises (see note 22) 1,687 —ii. Small Scale Industrial Undertakings (see notes below) — 720iii. Others 1,763,059 1,477,322

(b) Customers’ security deposits and credit balances andadvance against supplies and services to be rendered 120,868 596,598

(c) Investor Education and Protection Fund - Unclaimed dividend 1,564 1,284(d) Unearned revenue 715,064 724,136(e) Other liabilities 65,265 110,837(f ) Interest accrued but not due 16,195 110

2,683,702 2,911,007PROVISIONS(a) Proposed dividends 166,650 121,200(b) Provision for tax on proposed dividends 28,322 20,598(c) Provision for leave encashment 216,391 233,568(d) Provision for post retirement medical benefits 51,254 56,553(e) Provision for gratuity 151,652 148,853

614,269 580,772

3,297,971 3,491,779Notes:1. Pursuant to amendments to Schedule VI to the Companies Act, 1956 vide Notification No. GSR 719 (E) dated 16 November, 2007, the

amounts due to Micro and Small Enterprises only have been disclosed as against the earlier disclosure requirement of amounts dueto Small Scale Industrial Undertakings

2. The names of small scale industrial undertakings to whom the company owes a sum outstanding for more than 30 days as at 31March, 2007 aggregating to Rs.’(000) 720 are Victoria Forms, CCS Infotech Limited, Numeric Power Systems Ltd.

43

Year ended Year ended31.3.08 31.3.07

Rs./000s Rs./000sSchedule 12 : SALES AND SERVICES

(a) Sale of purchased equipment 3,891,089 4,035,455(b) Services

(i) Software services 3,288,493 3,283,722(ii) Maintenance services 595,335 685,719(iii) Other services 1,477,914 1,432,551

(c) Education and training 477,059 437,693(d) Lease rentals 12,389 14,008(e) Rentals from Special Economic Zone 29,668 —

9,771,947 9,889,148

Lease rentals include income Rs.’(000s) 2,543 (Previous year Rs.’(000s) 8,171) under finance leases.

Schedule 13 : OTHER INCOME

(a) Transfer from capital reserve - capital grants (see note 2f ) 2 895(b) Unclaimed balances/provisions written back 90,752 13,555(c) Dividend from mutual funds 11,844 -(d) Miscellaneous income 16,359 40,439

118,957 54,889

Schedule 14 : OPERATING AND OTHER EXPENSES

1. Equipment Purchased for Resale 3,765,961 3,958,933

2. Payments to and Provisions for Employees(a) Salaries, allowances and incentives 1,700,945 1,516,770(b) Contribution to provident and other funds 94,958 99,704(c) Staff welfare expenses 118,516 122,576(d) Retirement benefits (see note 18) 17,041 7,101

Sub-Total 1,931,460 1,746,151

3. Operating and Administration Expenses(a) Components / spares for maintenance and resale 326,229 333,218(b) Sub-contracted / outsourced services 756,492 775,313(c) Purchased software 11,158 49,093(d) Freight, handling and packing expenses 27,796 36,920(e) Rent and hire charges 108,794 103,736(f ) Rates and taxes 13,839 16,816(g) Repairs and maintenance:

(i) Building 28,830 32,543(ii) Plant and machinery 19,461 28,572(iii) Other 5,566 8,421

(h) Electricity charges 79,925 72,310(i) Insurance 4,273 6,424(j) Travelling and conveyance 192,407 248,759(k) Printing, stationery and computer consumables 21,871 27,480(l) Communication and postage 66,911 70,064(m) Advertisement, publicity and business promotion 15,541 17,292

CMC Limited

44


Schedule 16 : NOTES FORMING PART OF THE ACCOUNTS

1. Background

CMC Limited (“the Company”) is engaged in the design, development and implementation of software technologies and applications,providing professional services in India and overseas, and procurement, installation, commissioning, warranty and maintenance ofimported/ indigenous computer and networking systems, and in education and training.

The Company was a Government of India (GoI) enterprise up to 15 October, 2001. Under the disinvestment process, GoI sold 7,726,500shares representing 51 percent of the share capital to Tata Sons Limited, on 16 October, 2001. The GoI further sold its entire remainingshares representing 26.25 percent of the share capital, in March 2004 by an open offer to the public.

On 29 March, 2004, as per specific approval granted by SEBI, Tata Sons Limited transferred its entire shareholding in the Company toTata Consultancy Services Limited (a subsidiary of Tata Sons Limited). As a result, the Company has become a subsidiary of TataConsultancy Services Limited.

(n) Directors’ fees 735 900(o) Commision to non-executive Directors 1,800 —(p) Professional and legal fees 57,094 72,734(q) Education and training :

(i) Payments to franchisees 132,402 113,410(ii) Other expenses 67,135 77,128

(q) Living expenses – overseas contracts(r) Living expenses – overseas contracts 819,780 744,702(s) Bad debts/ advances written off 113,864 190,001

(net of bad debts recovered Rs’(000s) Nil{Previous year Rs.’(000s) 1,417})

(t) Provision for doubtful debts 2,581 1,174(u) Loss on disposal of fixed assets (net) 1,276 4,253(v) Loss on foreign exchange fluctuations (Net of Gain) 9,978 17,274(w) Other expenses (see note 15) 54,288 222,220

Sub-Total 2,911,026 3,270,757

Total 8,637,447 8,975,841


Rs./000s Rs./000s

Schedule 14 : OPERATING AND OTHER EXPENSES (Contd.)

Schedule 15 : INTEREST

1. Interest expense(a) On term loans 9,671 28,012(b) Cash credit accounts with banks 571 11,187(c) Others 161 420

10,403 39,6192. Less: Interest earned

(a) Loans and advances 275 196(b) Fixed deposits with banks [Tax deducted at source

Rs. ‘(000s) 1,223 (Previous year Rs. ‘(000s) 228)] 5,768 1,347(c) Others [Tax deducted at source Rs. ‘(000s) 143

(Previous year Rs. ‘(000s) 156)] 737 1,044

6,780 2,587

3,623 37,032

45

2. Significant Accounting Policies

a. Basis of accounting

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting and in accordancewith the Generally Accepted Accounting Principles (‘GAAP’) in India and comply with the accounting standards prescribed by theCompanies (Accounting Standards) Rules, 2006, to the extent applicable and in accordance with the provisions of the CompaniesAct, 1956, as adopted consistently by the Company.

b. Use of estimates

The preparation of financial statements requires the management of the Company to make estimates and assumptions thataffect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of thefinancial statements and reported amounts of income and expenses during the period. Example of such estimates includeprovisions for doubtful debts, future obligations under employee retirement benefit plans, provision for income taxes, accountingfor contract costs expected to be incurred to complete software development and the useful lives of fixed assets and intangibleassets. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.Actual results could differ from such estimates.

c. Fixed assets and depreciation

i. All fixed assets are stated at cost less accumulated depreciation. Cost includes purchase price and all other attributable costsof bringing the assets to working condition for intended use.

ii. Fixed assets acquired out of grants, the ownership of which rests with the grantor, are capitalised at cost.iii. Capital work-in-progress comprises the cost of fixed assets that are not ready for their intended use at the balance sheet

date.iv. Depreciation on all assets is charged proportionately from the date of acquisition/installation on straight line basis at rates

prescribed in Schedule XIV of the Companies Act, 1956 except in respect of:

• Leasehold assets that are amortised over the period of lease.• Computers, Plant and Machinery - (other items), that are depreciated over six financial years.

v. Assets costing less than Rs 5,000 individually have been fully depreciated in the year of purchase.

d. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized asa part of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

e. Revenue Recognition

i. Revenue relating to equipment supplied is recognised on delivery to the customer and acknowledgement thereof, inaccordance with the terms of the individual contracts.

ii. Revenue from software development on fixed price contracts is recognised according to the milestone achieved as specifiedin the contract, and is adjusted on the “proportionate completion” method based on the work completed.

iii. On time and material contracts, revenue is recognised based on time spent as per the terms of the specific contracts.iv. Revenue from warranty and annual maintenance contracts is recognised over the life of the contracts. Maintenance revenue

on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt ofpayment.

v. Revenue from “Education and Training” is recognised on accrual basis over the course term.vi. Dividend income is recognised when the Company’s right to receive dividend is established.

f. Grants

i. Grants received for capital expenditure incurred are included in “Capital Reserve”. Fixed assets received free of cost areconsidered as a grant and are capitalised at notional value with a corresponding credit to the Capital Reserve account.An amount equivalent to the depreciation charge on such assets is appropriated from capital reserve and recognised asrevenue in the Profit and Loss Account.

ii. Grants received for execution of projects is recognised as revenue to the extent utilized.iii. Unutilised grants are shown under other liabilities.

g. Inventories

Inventories include finished goods, stores and spares, work-in progress and education and training material.

i. Inventories of finished goods mainly comprising equipment for resale are valued at the lower of cost (net of provision forobsolescence) or net realisable value.

ii. Inventories of stores and spares are valued at cost, net of provision for diminution in the value. Cost is determined on weightedaverage cost basis.

iii. Inventories of “Education and Training material” are valued at the lower of cost and net realisable value. Cost is determinedon the “First In first Out” basis.

CMC Limited

46


iv. Work-in-progress comprises cost of infrastructural facilities in the process of installation at customers’ sites. These are valuedat cost paid/payable to sub-contractors.

h. Research and Development Expenses

Research and development costs of revenue nature are charged to the Profit and Loss account when incurred. Expenditure ofcapital nature is capitalised and depreciated in accordance with the rates set out in paragraph 2 (c)

i. Foreign exchange transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Monetary itemsdenominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on thatdate. Exchange differences arising on foreign currency transactions are recognized as income or expense in the period in whichthey arise. In case of forward contracts for foreign exchange, the difference between the forward rate and the exchange rate atthe date of the transaction are recognized over the life of the contract.

j. Investments

Long-term investments are stated at cost, less provision for other than temporary diminution in the carrying value of eachinvestment. Current investments comprising investments in mutual funds are stated at the lower of cost and fair value, determinedon a portfolio basis.

k. Leases

Operating LeaseLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified asoperating leases. Operating lease charges are recognised as an expense in the profit and loss account on a straight-line basis overthe lease term.

Finance LeaseLeases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Thelower of fair value of asset and present minimum lease rentals is capitalised as fixed assets with corresponding amount shown aslease liability. The principal component in the lease rentals is adjusted against the lease liability and interest component is chargedto profit and loss account.

l. Retirement benefits

i. Post-employment benefit plans

Payment to defined contribution retirement benefit schemes are charged as an expense as they fall due.

For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit method, with actuarialvaluations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the profit & lossaccount for the period in which they occur. Past service cost is recognized to the extent the benefits are already vested, andotherwise is amortized on a Straight-Line method over the average period until the benefits become vested.

The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefitobligations as adjusted for unrecognized past service cost and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost plus the present value of available refunds and reductions infuture contributions to the scheme.

ii. Short-term employee benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange of services rendered byemployees is recognized during the period when the employee renders the service. These benefits include compensatedabsences and performance incentives.

m. Provision for taxation

Income tax comprises of current tax and deferred tax. Deferred tax assets and liabilities are recognised for the future taxconsequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measuredusing the tax rates enacted or substantively enacted by the Balance Sheet date.

Consequent to the introduction of Fringe Benefits Tax (‘FBT’) effective 1 April, 2005 in accordance with the guidance note onaccounting for FBT issued by the Institute of Chartered Accountants of India, the Company has made a provision of FBT inaccordance with the provisions of the Income tax Act, 1961.

n. Impairment

At each Balance Sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is anyindication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset isestimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset’s net selling priceand value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and fromits disposal are discounted to their present value using a pre-discount rate that reflects the current market assessments of timevalue of money and the risks specific to the asset.

Reversal of impairment loss is recognized immediately as income in the profit and loss account.

47

o. Earnings per Share

The earnings considered in ascertaining the Company’s EPS comprises the net profit after tax. The number of shares used incomputing Basic EPS is the weighted average number of shares outstanding during the year.

3. Segment Information

i. Business segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Companyhas structured its operations into the following segments:

Customer Services (CS): Hardware supplies and maintenance, facilities management and provision of infrastructure facilities.

Systems Integration (SI): Systems study and consultancy, software design, development and implementation, softwaremaintenance and supply of computer hardware in accordance with customers’ requirements.

IT Enabled Services (ITES) - (Formerly Indonet): Value added services, data network, data center services, web design andhosting etc.

Education and Training (E&T): IT education and training service through its own centers and through franchisees.

Segment revenue and expenses include amounts, which are directly identifiable to the segment and allocable on a reasonablebasis. Segment assets include all operating assets used by the segment and consist primarily of debtors, inventory and fixedassets. Segment liabilities include all operating liabilities and consist primarily of creditors, advances/deposits from customersand statutory liabilities.

ii. Geographic segments

The Company also provides services overseas, primarily in the United States of America, United Kingdom and others.

4. Research and Development Expenses

Expenditure includes “Research and Development” expenditure aggregating to Rs.’ (000s) 76,993 (Previous year Rs.’ (000s) 110,902).Amounts aggregating to Rs.’ (000s) 2,615 (Previous year Rs.’ (000s) 5,687) have been capitalised.

5. Contingent liabilities and commitmentsAt at As at

31.03.08 31.03.07

Rs./000s Rs./000sa. Claims against the company not acknowledged as debts

� Liability on income tax 2,425 6,014� Under litigation 114,270 133,012� ESI Demand 280 280� Disputed demands raised by Sales tax authorities for which the

Company has gone on appeal against the department* 59,997 32,177b. Unexpired Letters of Credit 292,808 375,455c. Guarantees issued by bankers against Company’s counter guarantee 179,325 245,426d. Others **27,604 24,016e. Sales tax on leased assets 3,726 3,726f. Estimated amount of contracts remaining to be executed on capital

account (net of advances) and not provided for 118,667 75,631

* No provision is considered necessary since the Company expects favorable decisions.** Includes custom duty liability against goods-in-transit lying at customs port.

6. Fixed Assets

Gross Block as at 31 March, 2008 includes:

a. Assets acquired from Grants and aggregating to Rs.’ (000s) 41,865 (Previous year Rs.’ (000s) 41,865) being the property ofGovernment of India. The depreciation for the year on such assets is Rs.’ (000s) 2 (Previous year Rs.’ (000s) 895) and the accumulateddepreciation at the year end is Rs.’ (000s) 41,392 (Previous year Rs.’ (000s) 41,390).

b. Assets aggregating to Rs.’ (000s) 7,210 (Previous year Rs.’ (000s) 7,210) received free of cost. The depreciation for the year on suchassets is Rs. Nil (Previous year Rs. Nil) and the accumulated depreciation thereon is Rs. ’(000s) 7,138 (Previous year Rs.’ (000s) 7,138).

c. Plant and machinery given on lease aggregating to Rs.’ (000s) 9,824 (Previous year Rs.’ (000s) 19,812). The depreciation for the yearis Rs.’ (000s) Nil (Previous year Rs.’ (000s) 1,555), the accumulated depreciation thereon being Rs.’ (000s) 9,726 (Previous year Rs.’(000s) 15,297).

CMC Limited

48


7. Unexpired foreign exchange forward contractsThe following are outstanding Foreign Exchange Forward contracts, which have been designated as Cash Flow Hedges, as at 31 March,2008.

Foreign Currency No of Contracts Notional amount Rupee Equivalentof Forward contracts (Rs. /000s)

in foreign currency (Rs./000s)

USD 5 6,664 267,196

As of the balance sheet date, the Company has net foreign currency exposure that are not hedged by a derivative instrument orotherwise amounting to Rs. ‘000s 332,868.


Rs./000s Rs./000s8. Earnings in foreign currency

a. Export (Services) 1,328,034 1,363,078b. Export (Hardware) 96,876 24,644

9. Expenditure in Foreign Currency

a. Living allowance 245,603 229,034b. Travel 6,667 7,935c. Overseas branch expenses and others 37,732 35,516d. Technical services 32,889 134,787e. Taxes in Foreign Jurisdiction 16,778 18,673

10. Value of imports (calculated on CIF basis)a. Equipment /System software 2,050,619 1,994,668b. Stores and spares 1,907 3,190c. Capital equipment 19,625 50,634

11. Goods in Transit exclude customs duty pending clearance Rs. ’(000s) 12 (Previous year Rs. ‘(000s) 49).

12. Managerial Remuneration

a. Managerial Remuneration for Directors’(excluding provision for encashable leave and gratuityas separate figures for Whole-time Directors is not available). 6,000 2,896

b. The above is inclusive of:• Estimated expenditure on perquisites [includes Rs. (000s) Nil

(Previous year Rs. (000s) Nil) paid towards retirement benefits] 1,533 1,495• Contribution to Provident and Superannuation Fund 366 162Non Executive Directors

a. Commission 1,800 —b. Sitting fees 735 900

Computation of Net Profit in accordance with Section 309 (5) of the Companies Act, 1956.A. Profit before taxes and exceptional items 1,171,144 —B. Add:

a. Managerial Remuneration 6,000 —b. Provision for bad and doubtful debts and advances 2,581c. Loss on disposal of fixed assets 1,276 —

1,181,001C. Less:

Profit on redemption of mutual funds 5,547 —D. Net Profit as per Section 309 (5) of the Companies Act, 1956 1,175,454 —E. Commission paid:

Non Whole-time Directors 1,800 —

Note:The remuneration payable to the Non Whole-time Directors is subject to approval of the shareholders.

49

13. Information in regard to Purchases, Sales, Opening and Closing StocksComputer equipment and Peripherals


Nos. (Rs./000s) Nos. (Rs./000s)Opening stock 12,648 196,030 30,987 437,863Purchases 48,064 3,741,665 124,398 3,711,873Sales 51,464 3,875,737 142,737 4,031,148Closing stock* 9,248 153,710 12,648 196,030

* does not include goods in transit Rs. ‘(000s) 8,506 (Previous year Rs. ‘(000s) 1,667).

The quantitative details relate to quantities of main sub-systems whereas amounts include revenues relating to components as well, for which amountscannot be segregated.

14. Lease Commitments

a. Operating LeaseThe Company has taken property on operating lease and has recognized rent of Rs.’ (000) 23,986 (Previous Year Rs.’ (000) 9,147). .The total of future minimum lease payments under leases for the following periods:

Particulars As at As at31.03.08 31.03.07

(Rs./000s) (Rs./000s)

a. Not later than one year 27,769 4,965b. Later than one year but not later than five years 11,447 504

b. Finance LeaseThe Company has purchased and given on lease computer equipment, peripherals and system software. The details are asfollows:-

Particulars As at As at31.03.08 31.03.07

(Rs./000s) (Rs./000s)

a. Total gross investment 32,288 40,711• Not later than one year 8,423 8,422• Later than one year but not later than five years 23,865 32,289

b. Present value of Minimum Lease Payments receivable 13,710 14,590• Not later than one year 1,478 880• Later than one year but not later than five years 12,232 13,710

c. Unearned Finance Income 18,578 26,122

15. Auditors’ Remuneration

Other expenses include Auditors’ remuneration as follows:Year ended Year ended

Particulars 31.03.08 31.03.07(Rs./000s) (Rs./000s)

Statutory Audit 2,000 2,000Tax audit 800 800Other services 1,202 1,200Reimbursement of service tax 494 490Reimbursement of out-of-pocket expenses 199 450

4,695 4,940

The remuneration disclosed above excludes fees of Rs. ‘(000s) 2,425 (Previous year Rs. ‘(000s) 1,516) for professional services renderedby a firm of accountants in which the partners of the firm of statutory auditors are partners.

16. Pending RBI approval, certain anticipated losses from past international operations amounting to Rs. ‘(000s) 8,089 (Previous year Rs.‘(000s) 8,089), which stands provided for, are not written off.

Sanction of Reserve Bank of India for expenditure incurred on overseas operations amounting to Rs. ‘(000s) 3,436 (Previous year Rs.‘(000s) 3,436) during the year 1991-92 has not yet been received.

CMC Limited

50


17. Taxes

a. Current income tax includes taxes deducted in foreign jurisdiction Rs. ’(000s) 16,778 (Previous year Rs. ’(000s) 18,673).b. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.c. Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge is as follows:

(All amounts in Rs./000’s)

Particulars Opening Charged/ Charged/ TotalBalance (Credited) (Credited)

to P & L Account to Reserves

Deferred Tax Liabilities:

Tax impact of difference between carrying (104,507) (1,513) — (106,020)amount of fixed assets in the financial statementsand the income tax returnTotal (A) (104,507) (1,513) — (106,020)Deferred Tax Assets:Tax impact of expenses charged in the financialstatements but allowable as deductions in futureyears under income tax

• Provision for Doubtful Debts 5,018 877 — 5,895

• Provision for Employee Benefits 140,444 (628) *(4,625) 135,191

• Other expenses 1,149 (127) — 1,022

Total (B) 146,611 122 (4,625) 142,108

Net Deferred Tax Asset/ (Liability) 42,104 (1,391) (4,625) 36,088

*This pertains to the reversal of deferred tax asset consequent to write back of employee benefits of earlier year credited to Reservesand Surplus.

18. Retirement benefit plans

a. Defined contribution planThe Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifyingemployees. The Company’s contribution to the Employees Provident Fund is deposited in a trust formed by the Company underthe Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is recognized by the Income Tax authorities. Theprovident fund plan is operated by the Regional Provident Fund Commissioner. Under the scheme, the Company is required tocontribute a specified percentage of payroll cost to the retirement benefit scheme to fund the benefits.

The Company recognized Rs.’ (000s) 91,059 (Previous Year Rs.’ (000s) 86,404) for provident fund contributions in the Profit & Lossaccount. The contribution payable to the plan by the Company is at the rate specified in rules to the scheme.

b. Defined benefit plani. Gratuity Plan

The Company makes annual contribution to the Employee’s Group Gratuity-cum-Life Assurance scheme of the Life InsuranceCorporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment tovested employees at retirement, death while in employment or on termination of employment of an amount equivalent to15 days salary payable for each completed year of service or part thereof in excess of 6 months subject to a maximum ofRs.350,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost were measured using the ProjectedUnit Credit Method with actuarial valuations being carried out at each balance sheet date.

ii. Medical PlanThe Medical plan liability arises on retirement and death of an employee. The aforesaid liability is calculated on the basis offixed annual amount per employee (based on the basic salary) for qualifying employees.

The most recent actuarial valuation of plan assets and the present value of the defined obligation were carried out on 31March 2008. The present value of the defined obligation and the related current service cost and past service cost, weremeasured using Projected Unit Credit Method.

51

c. The following tables set out the funded status of the gratuity plan and medical plan and amounts recognized in the Company’sfinancial statements as at 31 March, 2008:

i. Change in benefit obligations:

Particulars Gratuity Medical TotalBenefit Plan(Unfunded)

(Rs. / 000s) (Rs. / 000s) (Rs. / 000s)Present value of obligations as on 1.4.07 (A) 155,006 56,553 211,559

(186,456) (53,742) (240,198)Current service cost (B) 15,784 4,210 19,994

(18,068) (4,007) (22,075)Interest Cost (C) 12,788 4,722 17,510

(12,747) (4,299) (17,046)Actuarial gain on obligation (D) 6,697 13,395 20,092

(27,166) (2,280) (29,446)Benefits paid (E) 11,045 836 11,881

(35,099) (3,215) (38,314)

Present value of obligations as on 31.03.08 (F=A+B+C-D-E) 165,836 51,254 217,090(155,006) (56,553) (211,559)

ii. Change in Plan Assets:

Fair value of Plan Assets as on 1.4.07 (A) 6,153 — 6,153(19,495) (—) (19,495)

Expected return on plan assets (B) 2,098 — 2,098(1,318) (—) (1,318)

Employers Contributions (C) 18,705 — 18,705(19,183) (—) (19,183)

Benefits paid (D) 11,045 — 11,045(35,099) (—) (35,099)

Actuarial gain (E) (1,727) — (1,727)(1,256) (—) (1,256)

Fair value of plan assets as on 31.03.08 (F=A+B+C-D+E) 14,184 — 14,184(6,153) (—) (6,153)

iii. Net Liability (i-ii): 151,652 51,254 202,906(148,853) (56,553) (205,406)

iv. Net cost for the year ended 31 March, 2008:

Current Service cost (A) 15,784 4,210 19,994(18,068) (4,007) (22,075)

Interest cost (B) 12,788 4,722 17,510(12,747) (4,299) (17,046)

Expected return on plan assets (C) 2,098 — 2,098(1,318) (—) (1,318)

Actuarial gain recognized during the year (D) 4,970 13,395 18,365(28,422) (2,280) (30,702)

Net Cost (F=A+B-C-D) 21,504 (-)4,463 17,041(1,075) (6,026) (7,101)

Note: Amounts in brackets and italics represent previous year’s figures.v. Principal actuarial assumptions:

Sr.No. Particulars Refer Note below Year ended Year ended31.03.2008 31.03.2007

(%) (%)i. Discount rate (p.a.) 1 8.00 8.25ii. Expected rate of return on assets (p.a.) 2 8.00 8.00iii. Salary excalation rate (p.a.) 3 4.00 4.00

Notes:1. The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated

term of obligations.2. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund during

the estimated term of the obligations.3. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Demographic assumptions:1. Retirement age 60 years2. Mortality rate Standard table LIC (1994-96) Scheme

CMC Limited

52


19. Related Party Disclosuresa. List of related parties

i. Company holding substantial interest in voting power of the Company• Tata Sons Limited (the Ultimate Holding Company)• Tata Consultancy Services Limited (the Holding Company)

ii. Fellow Subsidiaries• Tata AIG General Insurance Company Limited• Tata AIG Life Insurance Company Limited• E-NXT Financial Pvt Ltd• Tata Capital Limited• Tata Internet Services Ltd• Tata Sky Limited• Tata Teleservices (Maharashtra) Limited• Tata Consultancy Services Deutschland GmbH• Tata Consultancy Services Netherlands B.V.• Tata Consultancy Services Sverige AB• Tata Teleservices Limited• E2E Serwiz Solutions Limited• TCE Consulting Engineers Limited

iii. Subsidiary• CMC Americas, Inc. (formerly Baton Rouge International, Inc.)

iv. Key Management Personnel• Mr. R. Ramanan

b. Transactions /balances outstanding with Related Parties.(All amounts in Rs./000s)

Transactions/ Holding Subsidiary Fellow Key TotalOutstanding Company Company Subsidiary ManagementBalances Personnel

Purchase of goods/services 585,293 216,476 17,484 — 819,253(note a)

(608,907) (192,220) (33,099) (—) (834,226)

Sale of goods 1,888,181 — 464,017 — 2,352,198(note b)

(2,082,690) (2,831) (69,408) (—) (2,154,929)

Service income 1,992,045 941,332 55,043 — 2,988,420(note c)

(1,975,608) (825,116) (58,697) (—) (2,859,421)

Managerial 6,000 6,000Remuneration (2,896) (2,896)Debtors/Unbilled 995,706 215,537 49,103 — 1,260,346revenues outstanding (note d)at year end (1,101,611) (202,744) (52,834) (—) (1,357,189)

Creditors / 121,646 — 631 — 122,277Advances at (note e)year end (394,534) (—) (13,666) (—) (408,200)

Unsecured Loans 289,345 — — — 289,345(—) (—) (—) (—) (—)

Loans/ advances at year end 14,613 — — — 14,613(—) (—) (—) (—) (—)

Investment in — 81,801 — — —Share Capital (—) (81,801) (—) (—) (—)

Other 93,207 — — — 93,207transactions* (43,335) (—) (311) (—) (43,646)

*Includes dividend paid to Holding Company

Notes:a. Includes purchase from E2E Serwiz Solutions Limited Rs. (000s) 5,605, Tata Teleservices Limited Rs. (000s) 6,794 and Tata Teleservices (Maharashtra) Limited

Rs. (000s) 4,846.b. Include sales pertains to Tata Capital Limited Rs. (000s) 24,550, Tata Teleservices Limited Rs. (000s) 229,828 and Tata Teleservices (Maharashtra) Limited Rs.

(000s) 208,748.c. Include service income from Tata Consultancy Services Ltd - Asia Pacific Rs. (000s) 5,690, Tata Consultancy Services Sverige AB Rs. (000s) 40,028.d. Includes amount receivable from Tata Capital Limited Rs. (000s) 4,950, Tata Consultancy Services Ltd - Asia Pacific Rs. (000s) 5,688, Tata Teleservices Limited

Rs. (000s) 12,521, Tata Consultancy Services Sverige AB Rs. (000s) 20,910.e. Includes amount payable to Tata AIG General Insurance Company Limited Rs. (000s) 213, Tata Teleservices Limited Rs. (000s) 133, Tata Teleservices (Maharashtra)

Limited Rs. (000s) 258.f. Amounts in brackets and italics represent previous year’s figures.

53

20. Earnings per shareUnits Year ended Year ended

31.03.08 31.03.07

Net profit attributable to shareholders Rs./000s 882,235 640,990Weighted average number of equity shares in issue Nos. 000s 15,150 15,150Basic earning per share of Rs.10 each Rs. 58.23 42.31The Company does not have any outstanding dilutive potential equity shares.

21. Segment Informationa. Financial information about the primary business segments is given below:

(All amounts in Rs./000s)

Customer Systems ITES Education TotalServices Integration and Training

i. SEGMENT REVENUE- Sales and Services 5,667,813 2,975,206 629,167 471,645 9,743,831

(5,770,549) (2,989,988) (708,318) (420,293) (9,889,148)- SEZ Income & Other 28,116Operating Income (—)- Other Income 67,688 3,162 20,772 1,093 92,715

(19,803) (17,485) (3,781) (3,598) (9,697)ii. SEGMENT RESULTS 475,469 902,880 121,828 101,799 1,601,976

(450,413) (631,356) (206,949) (78,154) (1,366,872)iii. UNALLOCABLE EXPENSES 427,209

(net of unallocable income) (481,105)iv. OPERATING PROFIT 1,174,767

(885,767)v. INTEREST EXPENSE (NET) 3,623

(37,032)vi. PROVISION FOR TAX

- Current income tax 272,769(177,992)

- Deferred income tax 1,391(10,898)

- Fringe benefit tax 14,749(18,855)

vii. NET PROFIT 882,235(640,990)

viii. OTHER INFORMATIONSegment assets 2,432,552 1,246,661 310,362 146,269 4,135,844

(2,588,295) (1,378,826) (375,356) (140,068) (4,482,545)Unallocable assets 2,486,776

(1,509,149)

TOTAL ASSETS 6,622,620(5,991,694)

Segment liabilities 2,029,847 526,393 142,217 143,421 2,841,878(1,919,465) (538,918) (238,178) (127,942) (2,824,503)

Unallocable liabilities 745,438(844,832)

TOTAL LIABILITIES 3,587,316(3,669,335)

Capital Expenditure 663 836 350 —(6,316) (30,651) (32,216) (7,274)

Depreciation 12,564 25,917 7,238 6,913(12,612) (25,127) (9,093) (6,605)

Non-cash expenses other 31,762 59,091 18,170 8,849than depreciation (96,528) (143,207) (6,918) (948)

i. Unallocated assets include investments, advance tax and tax deducted at source.ii. Unallocated liabilities include secured/unsecured loans, deferred tax/current tax liabilities, proposed dividend and tax on proposed

dividend.iii Amounts in brackets represent previous year’s figures.

CMC Limited

54


b. Geographical Segment

(All amounts in Rs. / 000s)

India United United Others TotalStates of KingdomAmerica

SEGMENT REVENUE- Sales and Services 8,335,784 1,037,616 151,358 247,189 9,771,947

(8,547,956) (947,848) (119,557) (273,787) (9,889,148)- Other Income 118,957 — — — 118,957

(9,697) — — — (9,697)TOTAL ASSETS 5,863,944 230,806 45,974 481,896 6,622,620

(5,139,040) (285,323) (54,477) (512,854) (5,991,694)TOTAL LIABILITIES 3,443,229 67,494 15,615 60,978 3,587,316

(3,382,593) (85,738) (8,483) (192,521) (3,669,335)

Note: Amounts in brackets represent previous year’s figures.

22. Disclosures as per Micro, Medium and Small Enterprises Development Act, 2006 (MSMED)

Particulars Amount(Rs./000s)

a. Amounts payable to suppliers under MSMED (suppliers) as on 31 March, 2008- Principal 1,687- Interest due thereon 184

b. Payments made to suppliers beyond the appointed day during the year- Principal 2,209- Interest due thereon 69

c. Amount of interest due and payable for delay in payment (which have been 9paid but beyond the appointed day during the year) but without adding the interest under MSMED

d. Amount of interest accrued and remaining unpaid as on 31 March, 2008 262e. Amount of interest remaining due and payable to suppliers disallowable as deductible

expenditure under Income Tax Act, 1961 262

Note: The information has been given in respect of such vendors to the extent they could be identified as micro and small enterprisesas per MSMED on the basis of information available with the Company.

23. During the year, the Company has purchased and sold following units of investments:

Mutual Funds Purchase Value No. of units No. of units(See note below) purchased sold

(Rs.’000s)

BSL Interval Income Fund- Quarterly Plan II 30,000 3,052,412 3,052,412Tata Floater Fund 510,007 51,079,237 51,079,237HDFC Fixed Maturity Plans-Series VI 30,000 3,054,270 3,054,270Tata Treasury Manager Ship- Daily Dividend 250,005 250,410 250,410Tata Liquid Fund - Super High Investment Fund-Daily Dividend 510,000 457,953 457,953ING Liquid 90,000 8,992,202 8,992,202Tata Fixed Income Portfolio Fund - Scheme A1 50,000 5,025,873 5,025,873DSP Merrill Lynch Liquid Plus Fund 30,000 29,995 29,995

TOTAL 1,500,012 71,942,352 71,942,352

Note: Purchase value does not include the amount of dividend reinvested

24. Previous year’s figures have been presented for the purpose of comparison and have been regrouped/ reclassified where necessary.


S Ramadorai R RamananChairman Managing Director & CEO

J K Gupta Vivek AgarwalChief Financial Officer Company Secretary & Head-Legal

New Delhi17 April, 2008

55

I. Registration DetailsRegistration No. State Code

Balance Sheet DateDate Month Year

II. Capital raised during the year (Amount in Rs. ‘000)Public Issue Rights Issue

Bonus Issue Private Placement (includes Adv. against Equity)

III. Position of mobilisation and deployment of funds (Amount in Rs. ‘000)Total Liabilities Total Assets

Sources of Funds Paid-up Capital (including Advance against Equity) Reserves and Surplus

Secured Loans Unsecured Loans

Application of FundsNet Fixed Assets Investments

Net Current Assets Miscellaneous Expenditure

Deferred Tax Assets

Accumulated Loss

IV. Performance of the Company (Amount in Rs. ‘000)Turnover Total Expenditure

Profit/(Loss) Before Tax Profit/(Loss) after Tax

Earning Per Share in Rs. Dividend Rate (%)

V. Generic Names of three Principal Products/Services of the Company (as per monetary terms)Item Code No.(ITC Code)

Product Description AUTOMATIC DATA PROCESSING MACHINES

N I L

3 3 2 4 6 4 9

1 9 7 0

3 1 0 3 0 8

0 1

N I L

1 5 1 5 0 0

N I L

8 4 7 5 1 0

1 4 0 2 9 5 3

3 6 0 8 8

9 8 9 0 9 0 4

1 1 7 1 1 4 4

5 8 . 2 3

N I L

3 3 2 4 6 4 9

N I L

2 8 8 3 8 0 4

2 8 9 3 4 5

1 0 3 8 0 9 8

N I L

8 7 1 9 7 6 0

8 8 2 2 3 5

1 1 0

8 4 . 7 1

+/-+

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VITO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

N I L





CMC Limited

56


STATEMENT PURSUANT TO EXEMPTION UNDER SECTION 212(8) OF THECOMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY

As on 31 March, 2008

US $ INR

a. Capital 1,600,010 64,160,401

b. Reserves 2,645,510 106,084,951

c. Total Assets 15,298,467 613,468,527

d. Total Liabilities 11,052,947 443,223,175

e. Investments — —

Year Ended 31 March, 2008

US $ INR

f. Turnover 45,222,415 1,813,418,842

g. Profit/(Loss) before taxation 1,553,215 62,283,922

h. Provison for taxation 531,463 21,311,666

i. Profit/(Loss) after taxation 1,021,752 40,972,255

j. Proposed Dividend — —

Note : US $ have been converted to INR at the exchange rate prevailing on 31.03.2008 (1 US $ = INR 40.10)





57

AUDITORS’ REPORT

TO THE BOARD OF DIRECTORSOF CMC LIMITED ON THE CONSOLIDATED FINANCIALSTATEMENTS OF CMC LIMITED AND ITS SUBSIDIARY

We have examined the attached Consolidated Balance Sheet of CMC Limited (“the Company”) and its subsidiary as at31 March, 2008 and the Consolidated Profit and Loss Account for the year then ended and the Consolidated Cash FlowStatement for the year ended on that date.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditingstandards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance whether thefinancial statements are prepared, in all material respects, in accordance with an identified financial reporting framework andare free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonablebasis for our opinion.

We did not audit the financial statements of the Company’s subsidiary, whose financial statements reflect total assets ofRs. (000s) 588,405 as at 31 March, 2008 and total revenues of Rs. (000s) 1,343,119 for the year then ended. These financialstatements have been audited by other auditors whose reports have been furnished to us, and our opinion, insofar as itrelates to the amounts included in respect of the Company’s subsidiary, is based solely on the report of the other auditors.

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirementsof Accounting Standard AS-21, Consolidated Financial Statements and on the basis of the separate audited financial statementsof the Company and its subsidiary included in the consolidated financial statements.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports onindividual audited financial statements of the Company and its subsidiary, we are of the opinion that:

a. the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of the Company and itssubsidiary as at 31 March, 2008;

b. the Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations of theCompany and its subsidiary for the year ended on that date; and

c. the Consolidated Cash Flow Statement gives a true and fair view of the consolidated cash flows of the Company andits subsidiary for the year ended on that date.




CMC Limited

58


CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2008

Schedule As at As atRef. 31.3.08 31.3.07

Rs./000s Rs./000s

SOURCES OF FUNDS

1. Shareholders’ Funds(a) Share Capital 1 151,500 151,500(b) Reserves & Surplus 2 2,975,669 2,233,584

3,127,169 2,385,084

2. Loan Funds(a) Secured Loans 3 — 177,556(b) Unsecured Loans 4 289,345 —

289,345 177,556

3,416,514 2,562,640APPLICATION OF FUNDS

3 FIXED ASSETS(a) Gross Block 5 1,475,399 1,332,351(b) Less:Depreciation 789,786 783,381

(c) Net Block 685,613 548,970

(d) Capital Work in Progress 162,709 282,178

4 GOODWILL 3,412 3,412

5 DEFERRED TAX ASSETS(a) For the Parent (See note 13) 36,088 42,104(b) For the Subsidiary 4,370 3,808

40,458 45,912

6 INVESTMENTS 6 956,297 -

7 CURRENT ASSETS, LOANS & ADVANCES(a) Inventories 7 198,687 230,651(b) Sundry debtors 8 2,284,761 2,571,514(c) Unbilled revenues 1,088,320 1,155,670(d) Cash and bank balances 9 513,432 537,657(e) Loans and advances 10 976,643 871,659

5,061,843 5,367,1518 LESS : CURRENT LIABILITIES AND PROVISIONS 11

(a) Current Liabilities 2,865,912 3,092,460(b) Provisions 627,906 592,523

3,493,818 3,684,983

9 NET CURRENT ASSETS 1,568,025 1,682,168

3,416,514 2,562,640Notes forming part of the consolidated financial statements 16


For S B Billimoria & Co S Ramadorai R RamananChartered Accountants Chairman Managing Director & CEO

Jitendra Agarwal J K Gupta Vivek AgarwalPartner Chief Financial Officer Company Secretary & Head-LegalMembership No. 87104


59

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2008

Schedule Year ended Year endedRef. 31.3.08 31.3.07

Rs./000s Rs./000s

INCOME

1. Sales and services 12 10,647,383 10,798,132

2. Other Income 13 118,957 54,889

10,766,340 10,853,021

EXPENDITURE

3. Operating and other expenses 14 9.456,829 9,808,357

4. Depreciation 5 79,054 82,613

5. Interest (Net) 15 (3,148) 34,131

9,532,735 9,925,101

Profit Before Tax 1,233,605 927,920

6. Provision for Taxes (See note 11) 310,238 234,679

Profit after tax carried forward to Reserves and Surplus 923,367 693,241

Basic and diluted Earnings Per Share (Rupees) (See note 18) 60.95 45.76

Notes forming part of the consolidated financial statements 16


For S B Billimoria & Co S Ramadorai R RamananChartered Accountants Chairman Managing Director & CEO

Jitendra Agarwal J K Gupta Vivek AgarwalPartner Chief Financial Officer Company Secretary & Head-LegalMembership No. 87104


CMC Limited

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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2008


Rs./000s Rs./000s Rs./000sA. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 1,233,605 927,920Adjustments for :

Depreciation 79,054 82,613Interest expense 10,416 39,619Dividend from mutual fund (11,844) —(Profit) /Loss on sale of fixed assets 104 2,133Bad debts/advances written off (net) 113,864 190,693Unclaimed balances/provisions written back (90,752) (13,555)Provision for doubtful debts 2,846 1,174Unrealised Foreign exchange loss/(gain) (3,922) 6,707Fixed assets written off 1,172 2,120Transfer from capital reserve (2) (895)

100,936 310,609Operating profit before working capital changes 1,334,541 1,238,529Adjustments for :Trade and other receivables 574,599 (93,436)Inventories 31,964 292,945Trade payables and other liabilities (485,195) 420,376Cash generated from operations 1,455,909 1,858,414Direct taxes paid/deducted at source (431,804) (283,936)NET CASH FROM OPERATING ACTIVITIES (A) 1,024,105 1,574,478

B. CASH FLOW FROM INVESTING ACTIVITIESDividend on Mutual Fund 11,844 -Purchase of fixed assets (89,038) (359,800)Sale of fixed assets 799 7,272Foreign exchange translation adjustment (arising on consolidation) (11,992) (3,482)NET CASH FROM/(USED) IN INVESTING ACTIVITIES (B) (88,387) (356,010)

C. CASH FLOW FROM FINANCING ACTIVITIESInterest paid (3,597) (39,915)Proceeds/(Payment) of short term borrowings (177,556) (493,123)Proceeds/(Payment) of long term borrowings 289,345 -Dividend paid (including dividend tax) (141,798) (86,374)NET CASH FROM FINANCING ACTIVITIES (C) (33,606) (619,412)NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (902,112) 599,056CASH AND CASH EQUIVALENTS AS ON 1 APRIL, 2007 536,259 342,109(Excluding unrealised exchange difference of Rs.’(000s) 1,398]Add/(Less) : Reversal/Transitional provisions as per AS-15 not affecting Cash Flow 30,309 (404,906)CASH AND CASH EQUIVALENTS AS ON 31 MARCH, 2008 1,468,680 536,259[Excluding unrealised exchange difference of Rs.’(000s) 1,049](Including short term investments Rs.’(000s) 956,297 )





61

As at As at31.3.08 31.3.07

Rs./000s Rs./000sSchedule 1 : SHARE CAPITAL

Authorised35,000,000 (Previous year 35,000,000) equity share of Rs.10 each 350,000 350,000

Issued, Subscribed and Paid up15,150,000 (Previous year 15,150,000) equity shares of Rs.10 each fully paid up 151,500 151,500

Of the above:7,744,961 (Previous year 7,744,961) equity shares are held by Tata ConsultancyServices Limited, the Holding Company(See note 2)

Schedule 2 : RESERVES AND SURPLUS

(a) Capital Reserve(Grants from Government of India)(i) Opening balance 547 1,442(ii) Less:Transferred to Profit and Loss Account 2 895

(iii) Closing balance 545 547

(b) General Reserve(i) Opening balance 64,099 204,539(ii) Add:Transfer from profit and loss account 88,224 64,099Adjustment for increase in opening provision for employee/retirement benefits 25,684 -(iii) Less:Adjustment for increase in opening provision for employee benefits - 132,465Adjustment for increase in opening provision for retirement benefits - 72,074

Closing balance 178,007 64,099

(c) Foreign currency translation reserve(arising on consolidation)(i) Opening balance 12,939 16,421(ii) Add: Adjustment for current year (11,992) (3,482)

(iii) Closing balance 947 12,939

(d) Profit and Loss account(i) Opening balance 2,155,999 1,747,221(ii) Add: Additions during the year 923,367 693,241(iii) Less: Adjustment for increase in opening provision for - 78,566

retirement benefits 3,079,366 2,361,896(iv) Less: Proposed dividend 166,650 121,200(v) Less: Tax on Proposed dividend 28,322 20,598(vi) Less: Transfer to General reserve 88,224 64,099

2,796,170 2,155,999

2,975,669 2,233,584Note:Pursuant to a revision /clarification issued in respect of Accounting Standard 15 “Employee Benefits” (AS-15) adjustments for increase/decrease in opening provisions for employee/retirement benefits have been routed through the General Reserve.

Schedule 3 : SECURED LOANS

From banksCash credit accounts — 27,556Short term loan — 150,000

— 177,556Notes:1. Cash credits and short term loan from banks are secured by hypothecation of inventories, debtors and other current assets.2 Loans repayable within one year Rs.’(000s) Nil [Previous year Rs.’(000s) 150,000]

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

CMC Limited

62


As at As at31.3.08 31.3.07

Rs./000s Rs./000sSchedule 4 : UNSECURED LOANS

Long Term loan (from others) 289,345 —

Note:1 Loans repayable within one year Rs.’(000s) 19,290 [Previous year Rs.’(000s) Nil]

Schedule 5 : FIXED ASSETS (see note 7)(All amounts in Rs./000s)

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deductions/ As at As at For the Deductions/ As at As at As at31.03.07 Adjustments 31.03.08 31.03.07 year Adjustments 31.03.08 31.03.08 31.03.07

(a) Land(i) Leasehold 59,615 – – 59,615 9,683 700 – 10,383 49,232 49,932(ii) Freehold 605 – – 605 – – – - 605 605

(b) Buildings(i) Leasehold 16,167 – – 16,167 13,649 104 – 13,753 2,414 2,518(ii) Freehold 305,234 159,462 31 464,665 65,955 6,084 8 72,031 392,634 239,279

(c) Plant & Machinery(i) Computers 605,101 40,519 60,972 584,648 441,048 54,172 60,258 434,962 149,686 164,053(ii) Office and other equipment 53,271 3,909 4,085 53,095 34,459 1,941 3,484 32,916 20,179 18,812(iii) Others 185,418 7,306 6,884 185,840 156,216 9,622 6,809 159,029 26,811 29,202

(d) Furniture &Fittings 101,086 5,806 2,070 104,822 59,519 5,913 1,521 63,911 40,911 41,567

(e) Vehicles 5,854 770 682 5,942 2,852 518 569 2,801 3,141 3,002

TOTAL 1,332,351 217,772 74,724 1,475,399 783,381 79,054 72,649 789,786 685,613 548,970

(f) Capital work-in-progress 282,178 40,940 160,409 162,709 – – – – 162,709 282,178

GRAND TOTAL 1,614,529 258,712 235,133 1,638,108 783,381 79,054 72,649 789,786 848,322 831,148

Previous Year 1,347,443 360,596 93,510 1,614,529 781,957 82,613 81,189 783,381 831,148 565,486

* Freehold additions include interest capitalised amounting to Rs.’(000s) 2,274 [Previous year Rs.’(000s) Nil]** Capital work-in-progress includes interest amounting to Rs.’(000s) 6,992

Face As at As atvalue per 31.03.08 31.03.07

No. of units unit Description

CURRENT INVESTMENT (UNQUOTED) Rs./000s Rs./000sInvestments In Mutual Funds

5,135,925 10 ICICI Prudential Floating Rate Plan - Daily Dividend 51,370 —1,027,429 10 ING Mutual Fund Institutional - Daily Dividend 10,278 —7,027,042 10 Tata floater fund - Daily Dividend 70,521 —

50,088 1000 DSP Merrill Lynch Strategic Bond Fund 50,279 —11,126,747 10 Templeton FRIF Long Term Super Instt. 111,388 —

3,029,142 10 JM Money Manager Fund- Super Plus 30,304 —

Fixed Maturity Plan - Short Term

3,022,433 10 Tata Fixed Horizon Fund Series 17 - Schme D 30,224 —2,015,637 10 JM Interval Fund - Quarterly Plan 4 (JM QIF - 4) 20,156 —2,000,000 10 ICICI Prudential FMP -Series 39-16 Weeks Plan A 20,402 —7,031,308 10 DSP Merrill Lynch Liquid FMP -3 Months-Series 3 70,314 —5,031,795 10 JM Interval Fund - Quarterly Plan 6 (JM QIF - 6) 50,318 —

10,038,763 10 Tata Fixed Income Portfolio Fund - A2 100,491 —7,640,788 10 Tata Dynamic Bond Fund Option A 80,252 —

11,000,000 10 UTI Fixed Maturity Plan - HYFMP 110,000 —3,000,000 10 UTI Fixed Income Interval Fund 30,000 —1,998,981 10 Reliance Interval Fund 20,000 —5,000,000 10 ING Long Term FMP Ii (Growth Option) 50,000 —5,000,000 10 Kotak Fmp 13M Series 4 (Growth Option) 50,000 —

956,297 —

Schedule 6 : INVESTMENTS (at cost) (see note 19)

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As at As at31.3.08 31.3.07

Rs./000s Rs./000sSchedule 7 : INVENTORIES

(a) Finished goods - equipment for resale 162,216 197,697(b) Components/spares for maintenance and resale 19,043 21,171(c) Education and training material 12,640 10,005(d) Work-in-progress 4,788 1,778

198,687 230,651

Note: Finished goods include goods in transit Rs.’(000s) 8,505 [Previous year Rs.’(000s) 1,667]

Schedule 8 : SUNDRY DEBTORS

a. Over six months old (unsecured):Considered good 475,192 422,140Considered doubtful 237,095 236,513

712,287 658,653b. Others (unsecured):

Considered good 1,795,859 2,134,783

2,508,146 2,793,436Less: Provision for doubtful debts 237,095 236,511

2,271,051 2,556,925c. Future lease installments receivable (unsecured) (See note 15b) 32,288 40,711

Less: Unearned finance and service charges 18,578 26,122

13,710 14,589

2,284,761 2,571,514

Schedule 9 : CASH AND BANK BALANCES

(a) Cash on hand [including stamps on hand 2,659 2,587Rs.’(000s) 18 (Previous year Rs.’(000s) 16)]

(b) Cheques/demand drafts in hand 53,488 28,217(c) Balance with scheduled banks in:

(i) Current accounts 302,187 220,051(ii) Cash credit accounts 121,170 75,910(iii) Deposit accounts* 33,928 210,892

513,432 537,657

*includes Rs.’(000s) 1,195 on account of fixed deposits pledged with customers as security [Previous year Rs.’(000s) 1,195]

Schedule 10 : LOANS AND ADVANCES

(a) Advances recoverable in cash or in kind or for value to be received* 609,667 626,255(b) Advance income tax and tax deducted at source 376,665 255,095

[Net of Provision for Tax Rs ‘(000s) 1,393,482{Previous year Rs.’(000s) 1,133,910} and FBT Rs ‘(000s) 50,903{Previous year ‘(000s) 27,212}]

986,332 881,350(c) Less: Advances considered doubtful 9,689 9,691

976,643 871,659Notes:1. Amounts due from directors - 1722. Maximum amounts due from directors during the year 450 172

* includes deposits with Customs, Octroi, Electricity Boards etc. 14,732 11,179

CMC Limited

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As at As at31.3.08 31.3.07

Rs./000s Rs./000sSchedule 11 : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES(a) Sundry Creditors 1,875,002 1,563,311(b) Customers’ security deposits and credit balances and 186,396 686,385

advance against supplies and services to be rendered(c) Investor Education and Protection Fund *- Unclaimed dividend 1,564 1,284(d) Unearned revenue 721,490 730,533(e) Other liabilities 65,265 110,837(f ) Interest accrued but not due 16,195 110

2,865,912 3,092,460PROVISIONS(a) Proposed dividend 166,650 121,200(b) Provision for tax on proposed dividend 28,322 20,598(c) Provision for leave encashment 230,028 252,459(d) Provision for post retirement benefits 51,254 49,413(e) Provision for Gratuity 151,652 148,853

627,906 592,523

3,493,818 3,684,983


Rs./000s Rs./000sSchedule 12 : SALES AND SERVICES

(a) Sale of purchased equipment 3,891,089 4,035,455(b) Services

(i) Software services 4,163,929 4,192,706(ii) Maintenance services 595,335 685,719(iii) Other services 1,477,914 1,432,551

(c) Education and training 477,059 437,693(d) Lease rentals 12,389 14,008(e) Rentals from Special Economic Zone 29,668 –

10,647,383 10,798,132

Note: Lease rentals include income Rs.’(000s) 2,543[Previous year Rs.’(000s) 8,171] under finance leases.

Schedule 13 : OTHER INCOME

(a) Transfer from capital reserve - capital grants 2 895(b) Unclaimed balances/provisions written back 90,752 13,555(c) Dividend from Mutual Funds 11,844 –(d) Miscellaneous income 16,359 40,439

118,957 54,889

65


Rs./000s Rs./000sSCHEDULE 14

OPERATING AND OTHER EXPENSES

1. Equipment Purchased for Resale 3,765,961 3,958,933

2. Payments to and Provisions for Employees

(a) Salaries, allowances and incentives 2,123,406 1,974,659(b) Contribution to provident and other funds 118,527 101,716(c) Staff welfare expenses 112,273 122,740(d) Retirement benefits 17,041 7,101

Sub-Total 2,371,247 2,206,216

3. Operating and Administration Expenses

(a) Components/spares for maintenance and resale 326,229 333,218(b) Sub-contracted/outsourced services 1,196,850 1,183,483(c) Purchased software 12,109 49,302(d) Freight, handling and packing expenses 29,812 38,503(e) Rent and hire charges 116,266 110,910(f ) Rates and taxes 20,481 22,862(g) Repairs and maintenance:

(i) Building 28,845 32,543(ii) Plant and machinery 19,461 28,726(iii) Other 5,687 8,422

(h) Electricity charges 79,925 72,310(i) Insurance 64,856 52,029(j) Travelling and conveyance 226,451 275,978(k) Printing, stationery and computer consumables 23,677 28,806(l) Communication and postage 77,616 76,485(m) Advertisement, publicity and business promotion 16,510 18,000(n) Directors’ sitting fees 735 900(o) Commision to Non-Executive Directors 1,800 –(p) Professional and legal fees 62,384 100,924(q) Education and training :

(i) Payments to franchisees 132,402 113,410(ii) Other expenses 67,135 77,128

(r) Living expenses – overseas contracts 617,818 573,483(s) Bad debts/advances written off 113,864 189,276

[Net of bad debts recovered Rs.’(000s) Nil {Previous year Rs. ‘(000s) 1,417}](t) Provision for doubtful debts 2,846 1,174(u) Loss on disposal of fixed assets (Net of gain ) 1,276 4,253(v) Loss on foreign exchange fluctuations (Net of gain) 9,978 17,274(w) Other expenses 64,608 233,809

Sub-Total 3,290,621 3,643,208

Total 9,456,829 9,808,357

CMC Limited

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Rs./000s Rs./000sSchedule 15 : INTEREST

1. Interest expense

(a) On fixed loans 9,684 28,012(b) Cash credit accounts with banks 571 11,187(c) Others 161 420

10,416 39,619

2. Less: Interest earned

(a) Loans and advances 275 196(b) Fixed deposits with banks [Tax deducted at source

Rs.’(000s) 1,223 (Previous year Rs.’(000s) 228)] 5,768 1,347(c) Others [Tax deducted at source Rs.’(000s) 143 (Previous

year Rs.’(000s) 156)] 7,521 3,945

13,564 5,488

(3,148) 34,131

SCHEDULE 16 :

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS

1. These accounts comprise a consolidation of the Balance Sheet, Profit and Loss Account and Cash Flow Statement of CMC Limited, acompany incorporated in India and its wholly owned subsidiary CMC Americas, Inc. (formerly known as Baton Rouge International,Inc.), which is incorporated in the United States of America.

2. Background

CMC Limited (the Parent) is engaged in the design, development and implementation of software technologies and applications,providing professional services in India and overseas, and procurement, installation, commissioning, warranty and maintenance ofimported/ indigenous computer and networking systems, and in education and training.

The Parent was a Government of India (GoI) enterprise up to 15 October, 2001. Under the disinvestment process, GoI sold 7,726,500shares representing 51 percent of the share capital to Tata Sons Limited, on 16 October, 2001. The GoI further sold its entire remainingbalance representing 26.25 percent of the share capital, in March 2004 by an open offer to the public.

On 29 March, 2004, as per specific approval granted by SEBI, Tata Sons Limited transferred its entire shareholding in the Company toTata Consultancy Services Limited (a subsidiary of Tata Sons Limited). As a result, the Parent has become a subsidiary of Tata ConsultancyServices Limited.

CMC Americas, Inc. (the Subsidiary) derives its revenue throughout the United States of America from two sources:

a. Information technology services at customer sites for a contract fee.

b. Auxiliary services, such as maintenance contracts, systems upgrades, and training of customer personnel.

3. Significant accounting policies

a. Basis of accounting

The financial statements of the Parent have been prepared under the historical cost convention and comply with the AccountingStandards.

b. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires the Managementto make estimates and assumptions that affect the reporting balances of assets and liabilities and disclosures relating to contingentassets and liabilities as at the date of the financial statements and reporting amounts of income and expenses during the year.Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans,income taxes, foreseeable estimated contract losses and useful life of fixed and intangible assets. Contingencies are recordedwhen it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ fromsuch estimates.

67

c. Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Parent and its wholly owned subsidiary made upto31 March each year. All significant inter-Company transactions and balances are eliminated on consolidation. Goodwill arising onconsolidation represents the excess of the cost of acquisition over the book value of assets and liabilities at the date of acquisition.

d. Principles of Consolidation

The financial statements of the subsidiary used in the consolidation are drawn up to the same reporting date as of the Company.

The consolidated financial statements have been prepared on the following basis:

i. The financial statements of the Company and its subsidiary company have been combined on a line-by-line basis by addingtogether like items of assets, liabilities, income and expenses. Inter-Company balances and transactions and unrealized profits orlosses have been fully eliminated.

ii. The excess of cost to the Company of its investments in subsidiary company over its share of the equity of the subsidiary companyat the date on which the investment in the subsidiary company are made, is recognized as ‘Goodwill’ being an asset in theconsolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on the date of investmentis in excess of cost of investment of the Company, it is recognized as ‘Capital Reserve’ and shown under the head ‘Reserves andSurplus’, in the consolidated financial statements.

e. Fixed Assets and Depreciation

i. All fixed assets are stated at cost less accumulated depreciation. Cost includes purchase price and all other attributable costs ofbringing the assets to working condition for intended use.

ii. Fixed assets acquired out of grants, the ownership of which rests with the grantor, are capitalized at cost.

iii. Capital work-in-progress comprises the cost of fixed assets that are not ready for their intended use at the balance sheet date.

iv. Depreciation on all assets of the Parent is charged proportionately from the date of acquisition/installation on straight line basisat rates prescribed in Schedule XIV of the Companies Act, 1956 except in respect of:

• Leasehold assets that are amortized over the period of lease.

• Computers, Plant and Machinery - (other items), that are depreciated over six financial years.

Assets costing less than Rs 5,000 individually have been fully depreciated in the year of purchase.

Depreciation on assets of the Subsidiary is charged based on the estimated useful life of the assets using the straight line method ofdepreciation.

f. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as apart of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

g. Revenue Recognition

i. Revenue relating to equipment supplied is recognised on delivery to the customer and acknowledgement thereof, in accordancewith the terms of the individual contracts.

ii. Revenue from software development on fixed price contracts is recognised according to the milestone achieved as specified inthe contract, and is adjusted on the “proportionate completion” method based on the work completed.

iii. On time and material contracts, revenue is recognised based on time spent as per the terms of the specific contracts.

iv. Revenue from warranty and annual maintenance contracts is recognised pro rata over the life of the contracts. Maintenancerevenue on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receiptof payment.

v. Revenue from “Education and Training” is recognised on accrual basis over the course term.

h. Grants

i. Grants received for capital expenditure incurred are included in “Capital Reserve”. Fixed assets received free of cost are consideredas a grant and are capitalised at notional value with a corresponding credit to the Capital Reserve account.

An amount equivalent to the depreciation charge on such assets is appropriated from capital reserve and recognised as revenuein the Profit and Loss Account.

ii. Grants received for execution of projects is recognised as revenue to the extent utilized.

iii. Unutilised grants are shown under other liabilities.

CMC Limited

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i. Inventories

Inventories include finished goods, stores and spares, work-in progress and education and training material.

i. Inventories of finished goods mainly comprising of equipment for resale are valued at the lower of cost (net of provision forobsolescence) or net realisable value.

ii. Inventories of stores and spares are valued at cost, net of provision for diminution in the value. Cost is determined on weightedaverage cost basis.

iii. Inventories of “Education and Training material” are valued at the lower of cost and net realisable value. Cost is determined on the“First In First Out” basis.

iv. Work-in-progress comprises cost of infrastructural facilities in the process of installation at customers’ sites. These are valued atcost paid/payable to sub-contractors.

j. Research and Development Expenses

Research and development costs of revenue nature are charged to the profit and loss account when incurred. Expenditure of capitalnature is capitalised and depreciated in accordance with the rates set out in paragraph 3(e).

k. Foreign exchange transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Monetary itemsdenominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on that date.Exchange differences arising on foreign currency transactions are recognized as income or expense in the period in which they arise.In case of forward contracts for foreign exchange, the difference between the forward rate and the exchange rate at the date of thetransaction are recognised over the life of the contract.

In respect of the subsidiary, income and expenses are translated into the reporting currency at the average rate. All assets and liabilitiesare translated at the closing rate. The resulting exchange differences are transferred to foreign currency translation reserve.

l. Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified asoperating leases. Operating lease charges are recognised as an expense in the profit and loss account on a straight-line basis over thelease term.

Finance Lease

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Thelower of fair value of asset and present minimum lease rentals is capitalised as fixed assets with corresponding amount shown as leaseliability. The principal component in the lease rentals is adjusted against the lease liability and interest component is charged to profitand loss account.

m. Retirement Benefits

i. Post–employment benefit plans (for the Parent)

Payment to defined contribution retirement benefit schemes are charged as an expense as they fall due.

For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarialvaluations being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the Profit & Lossaccount for the period in which they occur. Past service cost is recognized to the extent the benefits are already vested, andotherwise is amortised on a straight line method over the average period until the benefits become vested.

The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligationsas adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from thiscalculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to thescheme.

ii. Short-term employee benefits (for the Parent)

The undiscounted amount of short term employee benefits expected to be paid in exchange of services rendered by employeesis recognized during the period when the employee renders the service. These benefits include compensated absences andperformance incentives.

iii. The Subsidiary is the sponsor of a defined contribution 401(K) Profit Sharing Plan for its employees. Subsidiary contribution to theplan for the year ended 31 March, 2008 aggregated to Rs ‘(000s) 1,693 (Previous Year Rs. ‘(00s) 2,012). The Subsidiary also sponsorsa separate profit sharing plan for its employees. Benefits are paid upon retirement, total disability, death or termination. TheSubsidiary did not make a contribution for the year ended 31 March, 2008.

69

n. Provision for taxation

Income tax comprises of current tax and deferred tax. Deferred tax assets and liabilities are recognised for the future tax consequencesof timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measured using the tax ratesenacted or substantively enacted by the Balance Sheet date.

Consequent to the introduction of Fringe Benefits Tax (‘FBT’) effective 1 April, 2005 in accordance with the guidance note on accountingfor FBT issued by the Institute of Chartered Accountants of India, the Company has made a provision of FBT in accordance with theprovisions of the Income tax Act, 1961.

o. Impairment

At each balance sheet date, the Company reviews the carrying amounts of its fixed assets to determine whether there is any indicationthat those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order todetermine the extent of impairment loss. Recoverable amount is the higher of an asset’s net selling price and value in use. In assessingvalue in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted totheir present value using a pre-discount rate that reflects the current market assessments of time value of money and the risks specificto the asset.

Reversal of impairment loss is recognized immediately as income in the profit and loss account.

p. Earnings Per Share (EPS)

The earnings considered in ascertaining EPS comprise the net profit after tax. The number of shares used in computing Basic EPS is theweighted average number of shares outstanding during the year.

q. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of a past event, when it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount ofthe obligation. A contingent liability is recognised where there is a possible obligation or a present obligation that may, but probablywill not, require an outflow of resources.


i. Business Segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Parent hasstructured its operations into the following segments:

Customer Services (CS): Hardware supplies and maintenance, facilities management and provision of infrastructure facilities.

Systems Integration (SI): Systems study and consultancy, software design, development and implementation, softwaremaintenance and supply of computer hardware in accordance with customers’ requirements. The operations of the Subsidiary fallin this category.

IT Enabled Services (ITES) - (Formerly Indonet): Value added services, data network, data center services, web design andhosting etc.

Education and Training (E&T): IT education and training service through its own centers and through franchisees.

Segment revenue and expenses include amounts, which are directly identifiable to the segment and allocable on a reasonablebasis. Segment assets include all operating assets used by the segment and consist primarily of debtors, inventory and fixedassets. Segment liabilities include all operating liabilities and consist primarily of creditors, advances/deposits from customersand statutory liabilities.

ii. Geographic Segments

The Parent also provides services overseas, primarily in the United States of America, United Kingdom and others

5. Research and Development Expenses

Expenditure includes “Research and Development” expenditure for the Parent aggregating to Rs.’ (000s) 76,993 (Previous year Rs.’(000s) 110,902). Amounts aggregating to Rs.’ (000s) 2,615 (Previous year Rs.’ (000s) 5,687) have been capitalised.

CMC Limited

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6. Contingent liabilities and Commitments

For the Parent:

As at As at31.3.08 31.3.07

Rs./000s Rs./000s

a. Claims against the Company not acknowledged as debts• Liability on income tax 2,425 6,014• Under litigation 114,270 133,012• ESI Demand 280 280• Disputed demands raised by Sales Tax authorities for which the Company

has gone on appeal against the department * 59,997 32,177b. Unexpired Letters of Credit 292,808 375,455c. Guarantees issued by bankers against Company’s counter guarantee 179,325 245,426d. Others **27,604 24,016e. Sales tax on leased assets 3,726 3,726f. Estimated amount of contracts remaining to be executed on capital

account (net of advances) and not provided for 118,667 75,631

* No provision is considered necessary since the Company expects favourable decisions.** Includes customs duty liability against goods in transit lying at customs port.

7. Fixed Assets

Gross Block for the Parent as at 31 March, 2008 includes:

a. Assets acquired from Grants and aggregating to Rs.’ (000s) 41,865 (Previous year Rs.’ (000s) 41,865) being the property of Governmentof India. The depreciation for the year on such assets is Rs.’ (000s) 2 (Previous year Rs.’ (000s) 895) and the accumulated depreciationat the year end was Rs.’ (000s) 41,392 (Previous year Rs.’ (000s) 41,390).

b. Assets aggregating to Rs.’ (000s) 7,210 (Previous year Rs.’ (000s) 7,210) received free of cost. The depreciation for the year on suchassets is Rs.’ (000s) Nil (Previous year Rs.’ (000s) Nil) and the accumulated depreciation thereon is Rs.’ (000s) 7,138 (Previous year Rs.’(000s) 7,138).

c. Plant and machinery includes assets given on lease aggregating to Rs.’ (000s) 9,824 (Previous year Rs.’ (000s) 19,812). The depreciationfor the year is Rs.’ (000s) Nil (Previous year Rs.’ (000s) 1,555), the accumulated depreciation thereon being Rs.’ (000s) 9,726 (Previousyear Rs.’ (000s) 15,297).

8. Current Liabilities

Customers’ security deposits and credit balances and advance against supplies and services to be rendered include a note payabledated 1 June, 1996, amounting to Rs.’ (000s) 46,115 (Previous year Rs.’ (000s) 50,336) due by the Subsidiary to an unrelated corporateentity. The note is due on demand and bears interest at 1% over the 1 year U.S. dollar LIBOR (total rate of 6.25% at March 31, 2008).

9. Unexpired foreign exchange forward contracts

The following are outstanding Foreign Exchange Forward contracts, which have been designated as cash flow hedges, as at 31 March,2008.

Foreign Currency No. of Contracts Notional amount Rupee Equivalentof Forward contracts (in ‘000s)

in foreign currency (in ‘000s)

USD 5 6,664 267,196

As of the balance sheet date, the Company has net foreign currency exposure that are not hedged by a derivative instrument orotherwise amounting to Rs. ‘000s 332,868.

10. Self Insurance

The Subsidiary became self-insured for a portion of its medical and prescription drug benefits. The Subsidiary has accrued the estimatedliability for claims reported and processed, as well as claims incurred but not reported through 31 March, 2008. It has also obtainedreinsurance coverage for the policy year 1 October, 2007 through 30 September, 2008.

11. Pending RBI approval certain anticipated losses for the Parent amounting to Rs.’ (000s) 8,089 (Previous year Rs’ (000s) 8,089), whichstand provided for, are not written off.

Sanction of Reserve Bank of India for the Parent for expenditure incurred on overseas operations amounting to Rs.’ (000s) 3,436 (PreviousYear Rs.’ (000s) 3,436) during the year 1991-92 has not yet been received.

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12. Provision for Taxes

The provision for taxes is as follows: Year ended Year ended31.03.08 31.03.07

Rs.’000s Rs.’000sa. Current taxes

i. Domestic taxes* 287,518 196,847ii. Foreign taxes 22,218 27,658

b. Deferred taxesi. Domestic taxes 1,391 10,898ii. Foreign taxes (889) (724)

Total 310,238 234,679

*includes taxes in foreign jurisdiction Rs.’ (000s) 16,778 (Previous year Rs.’ (000s) 18,673)

13. Deferred Tax

a. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.

b. Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge for the Parent:

(All amounts in Rs. /000’s)

Particulars Opening (Charged)/ (Charged)/ TotalBalance Credited to Credited to

Profit & Loss ReservesAccount

Deferred Tax Liabilities: Tax impact of difference between carrying amount of fixed assetsin the financial statements and the income tax return (104,507) (1,513) – (106,020)

Total (A) (104,507) (1,513) – (106,020)

Deferred Tax Assets:Tax impact of expenses charged in the financial statementsbut allowable as deductions in future years under income tax

• Provision for Doubtful Debts 5,018 877 – 5,895• Provision for Employee Benefits 140,444 (628) *(4,625) 135,191• Other expenses 1,149 (127) – 1,022

Total (B) 146,611 122 (4,625) 142,108

Net Deferred Tax Asset/ (Liability) 42,104 (1,391) (4,625) 36,088

*This pertains to the reversal of deferred tax asset consequent to write back of employee benefits of earlier year credited to Reservesand Surplus.

14. Retirement benefit plans

a. Defined contribution plan (for the Parent)

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifyingemployees. The Company’s contribution to the Employees’ Provident Fund is deposited in a trust formed by the Company underthe Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 which is recognized by the Income Tax authorities. Theprovident fund plan is operated by the Regional Provident Fund Commissioner. Under the scheme, the Company is required tocontribute a specified percentage of payroll cost to the retirement benefit scheme to fund the benefits.

The Company recognized Rs.’ (000s) 91,059 (Previous Year Rs.’ (000s) 86,404) for provident fund contributions in the Profit & Lossaccount. The contribution payable to the plan by the Company is at the rate specified in rules to the scheme.

b. Defined Benefit plan (for the Parent)

i. Gratuity plan

The Company makes annual contribution to the Employee’s Group Gratuity-cum-Life Assurance scheme of the Life InsuranceCorporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment tovested employees at retirement, death while in employment or on termination of employment of an amount equivalent to

CMC Limited

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15 days salary payable for each completed year of service or part thereof in excess of 6 months subject to a maximum ofRs.350,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost were measured using the ProjectedUnit Credit Method with actuarial valuations being carried out at each balance sheet date.

ii. Medical Plan

The Medical plan liability arises on retirement and death of an employee. The aforesaid liability is calculated on the basis offixed annual amount per employee (based on the basic salary) for qualifying employees.

The most recent actuarial valuation of plan assets and the present value of the defined obligation were carried out on 31March, 2008. The present value of the defined obligation and the related current service cost and past service cost was measuredusing Projected Unit Credit Method.

c. The following tables set out the funded status of the gratuity plan and medical plan and amounts recognized in the Company’sfinancial statements as at 31 March, 2008.

i. Change in benefit obligations:

Particulars Gratuity Medical TotalBenefit Plan(Unfunded)

(Rs. / 000s) (Rs. / 000s) (Rs. / 000s)Present value of obligations as on 1.4.07 (A) 155,006 56,553 211,559

(186,456) (53,742) (240,198)Current service cost (B) 15,784 4,210 19,994

(18,068) (4,007) (22,075)Interest Cost (C) 12,788 4,722 17,510

(12,747) (4,299) (17,046)Actuarial gain on obligation (D) 6,697 13,395 20,092

(27,166) (2,280) (29,446)Benefits paid (E) 11,045 836 11,881

(35,099) (3,215) (38,314)

Present value of obligations as on 31.03.08 (F=A+B+C-D-E) 165,836 51,254 217,090(155,006) (56,553) (211,559)

ii. Change in Plan Assets:

Fair value of Plan Assets as on 1.4.07 (A) 6,153 — 6,153(19,495) (—) (19,495)

Expected return on plan assets (B) 2,098 — 2,098(1,318) (—) (1,318)

Employers Contributions (C) 18,705 — 18,705(19,183) (—) (19,183)

Benefits paid (D) 11,045 — 11,045(35,099) (—) (35,099)

Actuarial gain (E) (1,727) — (1,727)(1,256) (—) (1,256)

Fair value of plan assets as on 31.03.08 (F=A+B+C-D+E) 14,184 — 14,184(6,153) (—) (6,153)

iii. Net Liability (i-ii): 151,652 51,254 202,906(148,853) (56,553) (205,406)

iv. Net cost for the year ended 31 March, 2008:

Current Service cost (A) 15,784 4,210 19,994(18,068) (4,007) (22,075)

Interest cost (B) 12,788 4,722 17,510(12,747) (4,299) (17,046)

Expected return on plan assets (C) 2,098 — 2,098(1,318) (—) (1,318)

Actuarial gain recognized during the year (D) 4,970 13,395 18,365(28,422) (2,280) (30,702)

Net Cost (F=A+B-C-D) 21,504 (4,463) 17,041(1,075) (6,026) (7,101)

Note: Amounts in brackets and italics represent previous year’s figures.

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v. Principal actuarial assumptions:

Sr.No. Particulars Refer Note below Year ended Year ended31.03.2008 31.03.2007

(%) (%)

i. Discount rate (p.a.) 1 8.00 8.25ii. Expected rate of return on assets (p.a.) 2 8.00 8.00

iii. Salary escalation rate (p.a.) 3 4.00 4.00

Notes:

1. The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimatedterm of obligations.

2. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund duringthe estimated term of the obligations.

3. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Demographic assumptions:

1. Retirement age 60 years2. Mortality rate Standard table LIC (1994-96) Scheme

15. Lease Commitments

a. Operating Lease

The Parent and Subsidiary have taken property on operating lease and have recognized rent of Rs.’ (000s) 31,454 (Previous YearRs.’ (000) 16,337) .The total of future minimum lease payments under leases for the following periods:

Particulars Year ended Year ended31.03.08 31.03.07

Rs./000s Rs./000s

a. Not later than one year 31,802 10,058b. Later than one year but not later than five years 11,645 2,678

b. Finance Lease

The Parent has purchased and given on lease computer equipment, peripherals and system software. The details are as follows:

As at As at31.03.08 31.03.07

Rs./000s Rs./000sa. Total gross investment 32,288 40,711

• Not later than one year 8,423 8,422• Later than one year but not later than five years 23,865 32,289

b. Present value of Minimum Lease Payments receivable 13,710 14,590• Not later than one year 1,478 880• Later than one year but not later than five years 12,232 13,710

c. Unearned Finance Income 18,578 26,122

16. Related Party Disclosuresa. List of related parties

i. Company holding substantial interest in voting power of the Parent/Subsidiary.• Tata Sons Limited (the Ultimate Holding Company)• Tata Consultancy Services Limited (the Holding Company)

ii. Fellow Subsidiaries• Tata AIG General Insurance Company Limited• Tata AIG Life Insurance Company Limited• E-NXT Financial Pvt Ltd• Tata Capital Limited• Tata Internet Services Ltd• Tata Sky Limited• Tata Teleservices (Maharashtra) Limited• Tata Consultancy Services Deutschland GmbH• Tata Consultancy Services Netherlands BV

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• Tata America International Corporation• Tata Consultancy Services Sverige AB• Tata Teleservices Limited• E2E Serwiz Solutions Limited• TCE Consulting Engineers Limited

iii. Key Management PersonnelMr R Ramanan

b. Transactions /balances outstanding with Related Parties.(All amounts in Rs./000s)

Transactions/ Holding Fellow Key TotalOutstanding Company Subsidiary ManagementBalances Personnel

Purchase of goods/services 585,293 57,185 — 642,478(note a)

(608,907) (93,077) (—) (701,984)Sale of goods 1,888,181 464,017 — 2,352,198

(note b)2,082,690) (69,408) (—) (2,152,098)

Service Income 2,627,015 55,043 — 2,682,058(note c)

(2,610,190) (58,697) (—) (2,668,887)Managerial 6,000 6,000Remuneration (2,896) (2,896)

Debtors/unbilled 1,117,490 49,103 — 1,166,593revenue as at (note d)year end (1,295,556) (52,834) (—) (1,348,390)

Creditors / 121,646 2,636 — 124,282Advances as at (note e)year end (394,534) (29,641) (—) (424,175)Unsecured Loans 289,345 — — 289,345

(—) (—) (—) (—)Loans/ advances 14,613 — — 14,613as at year end (—) (—) (—) (—)

Other 93,207 — — 93,207transactions* (43,335) (311) (—) (43,646)

*Includes dividend paid to Holding Company.

Notes:

a. Includes purchase from E2E Serwiz Solutions Limited Rs. (000s) 5,605, Tata Teleservices Limited Rs. (000s) 6,794, TataTeleservices (Maharashtra) Limited Rs. (000) 4,846 and Tata America International Corporation Rs. (000s) 39,701.

b. Includes sales pertaining to Tata Capital Limited Rs. (000s) 24,550, Tata Teleservices Limited Rs. (000s) 229,828 and TataTeleservices (Maharashtra) Limited Rs. (000s) 208,748.

c. Include service income from Tata Capital Limited Rs. (000s) 2,345, Tata Consultancy Services Ltd, Asia Pacific Rs. (000s)5,690, Tata Consultancy Services, Sverige AB Rs. (000s) 40,028

d. Includes amount receivable from E-NXT Financial Pvt Ltd Rs. (000s) 964 , Tata Capital Limited Rs. (000s) 4,950, TataConsultancy Services Ltd - Asia Pacific Rs.(000s) 5,688 , Tata Teleservices Limited Rs. (000s) 12,521, Tata Deutschland GmbHRs. (000s) 1,256, Tata Consultancy Services Sverige AB Rs. (000s) 20,910 Tata Consultancy Services Netherlands B.V.Rs. (000s) 2,671.

e. Includes amount payable to Tata Teleservices (Maharashtra) Limited Rs. (000s) 258 and Tata America InternationalCorporation Rs. (000s) 2,005

f. Amounts in brackets and italics represent previous year’s figures.

17. Earnings per share

Units Year ended Year ended31.03.08 31.03.07

Net profit attributable to shareholders Rs./000s 923,367 693,241Weighted average number of equity shares in issue Nos. 000s 15,150 15,150Basic earning per share of Rs.10 each Rs. 60.95 45.76The Company does not have any outstanding dilutive potential equity shares.

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a. Financial information about the primary business segments is given below:


Customer System ITES Education TotalServices Integration and Training

i. SEGMENT REVENUE- Sales and Services 5,667,813 3,850,642 629,167 471,645 10,619,267

(5,770,549) (3,898,972) (708,318) (420,293) (10,798,132)

- SEZ Income & Other 28,116Operating Income (–)

- Other Income 67,688 3,162 20,772 1,093 92,715(19,803) (-17,485) (3,781) (3,598) (9,697)

ii. SEGMENT RESULTS 475,469 958,568 121,828 101,799 1,657,664(450,413) (707,636) (206,949) (78,154) (1,443,152)

iii. UNALLOCABLE EXPENSES 427,207(net of unallocable income) (481,101)

iv. OPERATING PROFIT 1,230,457(962,051)

v. INTEREST EXPENSE (NET) (3,148)(34,131)

vi. PROVISION FOR TAX 294,987- Current income tax (204,926)- Deferred income tax 502

(10,898)- Fringe benefit tax 14,749

(18,855)

vii. NET PROFIT 923,367(693,241)

viii. OTHER INFORMATION

Segment assets 2,432,552 1,611,804 310,362 146,269 4,500,987(2,588,295) (1,712,738) (375,356) (140,068) (4,816,457)

Unallocable assets 2,409,344(1,431,166)

TOTAL ASSETS 6,910,3316,247,623

Segment liabilities 2,029,847 722,239 142,217 143,421 3,037,724(1,919,465) (732,121) (238,178) (127,942) (3,017,706)

Unallocable liabilities 745,438(844,833)

TOTAL LIABILITIES 3,783,162(3,862,539)

Capital Expenditure 663 836 350 —(6,316) (31,186) (32,216) (7,274)

Depreciation 12,564 26,281 7,238 6,913(12,612) (25,311) (9,093) (6,605)

Non-cash expenses other thandepreciation 31,762 59,091 18,171 8,849

(96,528) (143,207) (6,918) (948)

i. Unallocated assets include investments, advance tax and tax deducted at source.ii. Unallocated liabilities include secured/unsecured loans, deferred tax/current tax liabilities, proposed dividend and tax on

proposed dividend.iii Amounts in brackets represent previous year’s figures.

CMC Limited

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b. Geographical Segment

India United United Others TotalStates of KingdomAmerica

SEGMENT REVENUE- Sales and Services 8,335,784 1,913,051 151,358 247,190 10,647,383

(8,547,956) (1,856,832) (119,556) (273,788) (10,798,132)- Other Income 118,957 — — — 118,957

(9,697) (—) (—) (—) (9,697)TOTAL ASSETS 5,785,564 596,897 45,974 481,896 6,910,331

(5,061,272) (619,018) (54,477) (512,856) (6,247,623)TOTAL LIABILITIES 3,443,231 263,340 15,615 60,976 3,783,162

(3,379,398) (282,137) (8,483) (192,521) (3,862,539)

Note: Amounts in brackets represent previous year’s figures.

19. During the year, the Company has purchased and sold following units of investments:

Mutual Funds Purchase Value No. of units No. of units(See note below) purchased sold

(Rs.’000s)

BSL Interval Income Fund- Quarterly Plan II 30,000 3,052,412 3,052,412Tata Floater Fund 510,007 51,079,237 51,079,237HDFC Fixed Maturity Plans-Series VI 30,000 3,054,270 3,054,270Tata Treasury Manager Ship- Daily Dividend 250,005 250,410 250,410Tata Liquid Fund - Super High Investment Fund-Daily Dividend 510,000 457,953 457,953ING Liquid 90,000 8,992,202 8,992,202Tata Fixed Income Portfolio Fund - Scheme A1 50,000 5,025,873 5,025,873DSP Merrill Lynch Liquid Plus Fund 30,000 29,995 29,995

TOTAL 1,500,012 71,942,352 71,942,352

Note: Purchase value does not include the amount of dividend reinvested

20. Previous year’s figures have been presented for the purpose of comparison and have been regrouped / reclassified where necessary.


Customer Systems ITES Education TotalServices Integration and Training





CMC Limited

April 17, 2008

The Shareholders ofCMC Limited

Re: Payment of Dividend by Electronic Clearing Services (ECS)

Dear Shareholder,

We are pleased to inform you that the Board of Directors at their meeting held on April 17, 2008 have recommended payment of dividendfor the year ended March 31, 2008 @ Rs.11/- per equity share. This dividend will be paid after the same is declared at the 32nd Annual GeneralMeeting scheduled to be held on June 24, 2008.

In accordance with SEBI’s directions vide their Circular No. DCC/FITT/Cir-3/2001 dated October 15, 2001, arrangements have been made tocredit your dividend amount directly to your bank account through the Electronic Clearing Service (ECS).

We, therefore, request you to furnish your bank details in the ECS Mandate Form printed overleaf together with a xerox copy ofyour cheque leaf and send to our Registrars, Karvy Computershare Private Limited on or before June 18, 2008, in case you holdshares in physical form. The said details in respect of the shares held in electronic form should be sent to your respective DepositoryParticipant and not to the Registrars as the Registrars are obliged to use only the data provided by the Depository while makingpayment of dividend. Please mention the correct 9 digit MICR Code for giving the ECS credit to your account.

In case of receiving your request after the due date, the mandate will not be considered for this dividend. However, the same will be used forfuture dividend payments, unless the same is amended or revoked by you.

In the absence of adequate response from the shareholders of any particular centre(s), the Company reserves its right of paying the dividendby dividend warrants.

Thanking you,

Yours faithfully,

For CMC Limited

VIVEK AGARWALCompany Secretary & Head - Legal

�

RE: PAYMENT OF DIVIDEND BY ELECTRONIC CLEARING SERVICES (ECS)

Shareholders authorization to receive dividend through Electronic Credit Service Mechanism

1. Name of the first/sole shareholder

2. Folio No./D.P. ID & Client ID Nos.

3. Name of the Bank in full

4. Branch, Address & Tel. No.

5. 9-digit code number of the Bank and Branch

appearing on the MICR cheque

6. Account Number (as given on the cheque book)

7. Account type (Please tick)

(Please attach a photocopy of a cheque issued to you by your Bank, for verification of the above particulars.)

I hereby declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for any

reason(s), beyond the control of the Company, I will not hold the Company responsible. I agree to discharge the responsibility expected of

me as a participant under the scheme.

Date :

Place : Signature

Encl: Copy of the cheque leaf

NOTES

1. In case you hold shares in physical form, please send the aforesaid form duly filled in and signed by all the Shareholders to our Registrars,

M/s Karvy Computershare Private Limited at their Office - Karvy House, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad – 500 034.

2. In case you hold shares in D’mat form, please furnish the aforesaid details to your depository participant and not to the Registrars.

MANDATE FORM

Savings Bank Current Cash Credit

Affix RevenueStamp

of 15 Paise

I/We..........................................................................................................................................................................................................................................................................

of................................................................................................................................................................................................................................................................................(Write full address)

......................................................................................................................................................being a Member(s) of CMC LIMITED, hereby appoint

................................................................................................................ of ........................................................................................................................(Write full address)

...................................................................................................................................................................................................................................................................................

or failing him/her...............................................................................of...............................................................................................................................................................

....................................................................................as my/our proxy to attend and vote for me/us and on my/our behalf at the 32nd Annual GeneralMeeting to be held on Tuesday, June 24, 2008 at 3.30 p.m. and at any adjournment thereof.

AS WITNESS under my/our hands this day of , 2008

Folio No. .......................................................... DPID No. .................................................................. Client ID No. .............................................................

Signature ......................................................... .............................

NOTES :1. The Proxy need NOT be a Member.2. The Proxy Form must be deposited at the Registered Office not less than 48 hours before the scheduled time for holding the meeting.

DP ID

Client ID

CMC Limited

Registered Office: CMC Centre, Old Mumbai Highway, Gachibowli, Hyderabad - 500032, A.P.

PROXY FORM

�

�

CMC Limited

Registered Office: CMC Centre, Old Mumbai Highway, Gachibowli, Hyderabad - 500032, A.P.

ATTENDANCE SLIP

Folio No.

Name

I certify that I am a registered Shareholder/Proxy for registered Shareholder of the Company.

I hereby record my presence at the 32nd Annual General Meeting of the Company at Bhartiya Vidya Bhavan Auditorium, BVB HyderabadKendra, No. 5-9–1105, Basheerbagh-King Koti Road, Hyderabad-500 029, A.P., on Tuesday, June 24, 2008 at 3.30 p.m.

SignatureNote:Please sign this attendance slip and hand it over at the attendance counter at the ENTRANCE OF THE MEETING HALL.

CMC Annual Report 2007 08

Economy & Finance

Transcript of CMC Annual Report 2007 08