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					          COMPANY DETAILS                                                 TENTH ANNUAL REPORT
                                                                                2002-2003


BOARD OF DIRECTORS                                                     CONTENTS                            PAGE
Suresh Kumar
Vijay Thacker
Ramni Nirula                                                           Mission                              04
Balaji Swaminathan                                                     Overview                             06
V. Srinivasan, Managing Director & CEO                                 Managing Director s Statement        12
Manoj Kunkalienkar, Executive Director &                               Business Profile                     20
                    President India Operations
                                                                       Client Speak                         30
SENIOR MANAGEMENT                                                      People                               36
Arvind Joshi                                                           Commitment                           44
   President & COO (Australia & New Zealand)
                                                                       Media Reports                        51
Debneel Mukherjee
   President & COO (Far East Operations)                               ICICI Infotech Limited
Hari Padmanabhan                                                          - Directors Report                58
   President (MEA Operations) & Head Enterprise Solutions
Manmohan Singh                                                            - Auditors Report                 64
   President & COO (US Operations)                                        - Financials                      68
Prasad Rangnekar                                                       US GAAP Management
   COO (European Operations)
                                                                       Discussion & Analysis               94
Aftab Merchant
   General Manager - Saudi Arabian Operations                          US GAAP Financials (Consolidated)   102
Dibyajyoti Chaudhuri
   General Manager - Enterprise Solutions (India)
                                                                       SUBSIDIARIES
Manoj Mandavgane
   General Manager - HR & Administration                                 ICICI Infotech Inc.               126
M. B. Battliwala                                                         ICICI Infotech Pte. Ltd.          142
   General Manager - Public Relations
                                                                         ICICI Infotech SDN BHD            164
Shirish Atre
   General Manager - Banking Products                                    ICICI Infotech Pty. Ltd.          178
Shridhar Kane
   General Manager - Quality
Sudha Kunkalienkar
   General Manager - Software
T. V. Rangaswami
   General Manager - BPO, Process Control, Audit and Risk Mitigation

Amar Chintopanth
   Chief Financial Officer
S. R. Shettigar
   Company Secretary


AUDITORS
Lodha & Company, Mumbai - Statutory Auditors
Ernst & Young, New Delhi - Auditors, US GAAP
compliance

BANKERS
ICICI Bank
Development Credit Bank

REGISTERED OFFICE
Tower 5, 3rd to 6th floors,
International Infotech Park,
Vashi, Navi Mumbai 400 705
4
All path-breaking innovations over the years have ensured that the change will
be for the better, by offering solutions that just didn t exist before.

Take the wheel, for instance. When that log first rolled down the hill and man
thought of using it to make movement easier, life was changed forever.

Or the clock, that allowed us to tell time. Or the matchbox, that pioneering
instance of portable fire in your pocket, ready to be struck as and when you
need it - and a great leap forward from rubbing two stones together. With
every innovation, right from the tiny paper clip and safety pin to the world
spanning aircraft and cruise ship, there was no looking back.

ICICI Infotech is in the business of coming up with revolutionary solutions that
help change things for the better. Having transformed into an IT company in
1999, it moved on to offer services, then products, then solutions and has now
evolved into a full-fledged global IT solutions company offering solutions to
customer’s needs around the world. Grown to have a presence in eight
countries in just a few years, it already has a few milestones to its credit. ICICI
Infotech has led the way by providing technology solutions that would help
banks, insurance companies, manufacturing, distribution and retail companies
to turn around their operations and realize a better tomorrow. And with every
new endeavor, it is consistently taking solutions beyond tomorrow



           Our Mission Our Mission Our Mission
      To consistently create value for our stakeholders, by providing solutions which
      enable our customers to achieve excellence and sustainable competitive edge.




                                                                      5
                     Looking
                       beyond
                                         tomorrow...
    ICICI Infotech has transformed itself from a software services company to
    an end-to-end solutions provider. This transformation was achieved by
    adopting cutting edge technology, enhancing the range of services,
    developing a number of ready to use software products and expanding the
    geographical reach of its offerings. Today it has grown into a company
    providing end-to-end solutions in the areas of Enterprise Resource Planning
    and Management, Insurance, Banking, Security Consulting and Software
    and IT Infrastructure Services. The company today has grown into a 1300
    strong family worldwide comprising of an enviable mix of Technical and
    Functional experts. It has today grown to have its presence in eight
    countries offering a comprehensive range of products and services. ICICI
    Infotech has established state of the art Global Development Centres in
    India and USA to support its ever-growing customer requirements.


    Evolving into a multi-competency organization
    In the early 90’s, ICICI Group, a US$ 22 billion financial conglomerate today,
    was in the process of transforming itself from an industrial financing
    institution to a Universal Bank by tapping the opportunities opened up due
    to economic liberalization and globalization. The Group adopted an
    aggressive stand in the retail market and the unprecedented support it
    received in its retail offerings necessitated a strong back office set up
    dedicated to serve the retail investors. The result - ICICI Investor Services
    Ltd., a small and vibrant organization providing high quality service to its
    retail customers. The company extended its reach to provide investor
    servicing into wholesale borrowings and related accounting & MIS services.

    By mid 90’s the company had garnered in-depth knowledge in investor
    services, business process engineering and system implementation. The
    offerings were enhanced by successfully completing the mandate given by
    the Group in the areas of system implementation, image based processing,
    integrating applications for online real-time process. The domain
    knowledge and the project management skills it acquired during this period
    were the foundation for its transformation into an IT solutions company.




6
In 1999, the Investor Services arm was transformed into an IT solutions
company, giving birth to ICICI Infotech Ltd., the Mandate - One stop shop for
all technology solutions and to become one amongst the top IT service providers.

The company adopted an aggressive growth path with a combination of
organic and inorganic growth. This helped the company to build up a range
of service offerings, to get a quick foothold in the international markets and
to take its expertise across geographies in the areas of Banking, Insurance,
Retail and Distribution, Contracting, Manufacturing and other verticals. ICICI
Infotech today is a global IT solutions provider, evolving not only in
technological sophistication but also in strategy, process and organization
model. Very few companies around the world have such a wide range of
product offerings.

By integrating various strategic acquisitions, ICICI Infotech has taken giant
strides to provide technology solutions with a unique and unparalleled
combination of leadership, superior development resources and robust
methodologies. It adds value to customers by providing customized
solutions, keeping in mind the future requirements of the company, industry
and economy. This philosophy is succinctly summed up in the company’s
motto, `Beyond Tomorrow’.

Today, ICICI Infotech's global offerings encompass :
   Technology Services including Software Consultancy & Development,
   Information Security Consulting Services, Managed Services and
   Networking Services
   BFSI (Banking, Finance Services and Insurance) solutions
   ERP II products specially verticalised across Manufacturing, Contracting,
   Retail and Distribution.




                                                             7
When pre-historic man saw a log rolling down a hill, his mind
saw way beyond that log - and he invented the wheel. Look
at where his vision has taken us today…
Vision
"Understanding human needs is
half the job of meeting them’’
Adlai Stevenson
Shaping
 tomorrow             V. Srinivasan
 Managing Director & Chief Executive Officer
The global economy was entangled in another year of slackened growth
with output showing a marginal increase to 3% in 2002 from 2.3% in 2001.
Globally, growth rates have weakened across industries and this coupled
with the continued geopolitical uncertainty in various parts of the world have
had a negative impact on the IT industry. The major IT spenders are cutting
down their IT spend to business critical systems, wherein there is a tangible
return on their IT investment. Besides, the appetite for new technology
initiatives have dried up significantly.

The IT industry has during the last three years undergone significant
transformation, with the polarization of business taking place towards the
big IT consulting and systems integration companies, as the clients are
increasingly willing to only interface with fewer IT vendors. Hence, the
big IT companies
are able to attract
large IT projects,         ICICI Infotech repositioned to adapt itself to
whereas the midsize       this changing environment and exploited the
and smaller IT firms       opportunities arising out of this challenging
are increasingly facing            and tumultuous environment.
growth pressures.
These challenging
times have been compounded further with significant pricing pressure.

ICICI Infotech repositioned to adapt itself to this changing environment and
exploited the opportunities arising out of this challenging and tumultuous
environment. It garnered its strengths and successfully ventured into vertical
specific solutions with its ERP offering, Government vertical and Information
Security Consulting business. It also strengthened and added to its basket of
solutions for the Banking and Insurance verticals. These lines of business
will help the company grow in the next fiscal. The geographical reach was
expanded with subsidiaries in the Australian market and the Malaysian
market and a joint venture in the German market.

The completion of the repositioning and integration exercise, additional
investments in brand building and strengthening of other essential
ingredients such as Research & Development, Marketing, Human Resource
Development, Risk Management, etc. will foster the company s growth over
the next few years. We are already seeing signs of our product business
getting into the growth phase and with the growing outsourcing wave in the
US and Europe, we hope that our services business will also grow significantly.




                                                            13
     We continuously invest in human resources as people form the nucleus
     around which our organization is built. In the current year, we have built up an
     enviable mix of highly talented people across various geographies. The
     domain expertise and technology skill was enhanced with training in soft skills
     to enable them to provide world-class services to our clients in all our
     solutions offering. Bringing in lateral recruitment from top companies
     strengthened the management capabilities further.

     Our commitment to our stakeholders strengthens trust amongst our
     customers, employees, shareholders and community. This commitment is
     enriched by following a high level of self-regulatory approach, which goes
     beyond the minimum statutory prescriptions. An appropriate corporate culture
     is fostered and instilled in the organizational dynamics with a view to
     encouraging efficient use of resources and developing accountability and
                                        stewardship. A constant review of the
                                        systems, processes and controls is
             In the current year,       carried out to mitigate risks, safeguard
              we have built up          the assets of the company and secure
         an enviable mix of highly      alignment of individual, organizational
           talented people across       and societal interests. The executive and
            various geographies.        management powers of the Board are
                                        structured and allocated with the
                                        objectives of promoting fairness,
     transparency and accountability in corporate affairs and thereby create value
     for stakeholders.

     On a consolidated basis, ICICI Infotech clocked revenues of about Rs.2300
     million and net earnings of about Rs.86 million under US GAAP The           .
     profitability of the business was impacted mainly due to various new
     initiatives resulting in higher selling and administrative expenses arising out of
     establishment of offices and sales force in multiple geographies. Further the
     profit margin also shrank as a result of the worldwide economic slowdown. In
     order to improve the financial position in this situation, stringent cost cutting
     measures across the board as well as sustained marketing efforts have been
     initiated.

     On the road ahead, we feel that the business environment will continue to be
     tough in the first quarters of the year with IT spend being very tight and
     competition for offshore outsourcing business increasing. Besides, the
     disturbances in the Middle East region might force some of our prospects to




14
postpone decision-making and thus further
lengthen sales cycles.

Given this background, we will continue to         Our commitment
leverage our offshore outsourcing model in        to our stakeholders
the North American and European regions       strengthens trust amongst
and expand the reach of our products                our customers,
business in the various geographies by         employees, shareholders
continuously investing in the marketing,            and community.
brand building and vigorous sales efforts.

We sincerely appreciate the wholehearted support of our customers, business
partners, employees, shareholders and other regulatory agencies for their
exemplary contribution and support in our journey towards excellence.




                                                         15
Lighting a fire used to take a lot of effort. Until a genius
thought of a simpler, safer, foolproof way…
Solutions
     Designing




20
future future
  ICICI Infotech’s ability to expand its spectrum of products and services to
  meet industry needs and evolve solutions focused on specific industry
  verticals adds significant value to its customers. ICICI Infotech’s philosophy
  is to evolve these solutions based on the futuristic needs of the customers
  and the industry segments they are in.

  ICICI Infotech combines the services capabilities and products to provide
  solutions for the business needs of its customers across various industry
  verticals.




                                                             21
     Technology Services
     Software Development & Consultancy Services

     ICICI Infotech provides end-to-end software solutions and information
     systems consulting services for its clients with a primary focus on Financial
     Services, Manufacturing, Retail, Distribution and E-Governance verticals.

     The company’s core competence lies in its varied technical skillsets and
     capabilities coupled with rich domain knowledge acquired while providing
     high-end software solutions across industries. The company has developed
     proficiency in web-enabling brick and mortar businesses and has successfully
     conceived, designed and implemented large projects in web, portal and e-
     business space. The company has also handled large enterprise application
     integration projects.

     One of the keys to success in the highly competitive software services arena
     has been the company’s customer responsiveness and ability to deliver
     solutions faster with the aid of offshore development centres that work in a
     virtual 24x7 environment. This proactive approach is aimed at identifying and
     correcting customers’ problems before they affect their systems. The
     company has state-of-the-art software development infrastructure at Mumbai,
     Bangalore, Chennai and New Jersey, providing solutions to its growing
     clientele across North America, Europe and Asia. The company has more than
     1300 professionals with multiple skillsets and capabilities in emerging as well
     as conventional technologies and platforms. More than 300 professionals are
     based at various locations across North America, Asia Pacific and Europe for
     providing onsite software solutions to overseas clients.




22
Software services from the company include:

 Custom Software Development
 System Integration
 Maintenance & Enhancement Support
 Software Process Re-engineering
 Embedded Solutions
 Value Chain Management Solutions (SCM, CRM, etc.)
 Enterprise Application Integration & Data Warehousing Solutions
 E-Commerce & M-Commerce Applications




                                                          23
     Information Security and Consulting Services

     Information is an asset and has to be protected at all times. Protecting
     information assets demands a totality in approach as partial security is as
     good as no security at all. ICICI Infotech’s Information Security and
     Consulting Group (ISCG) provides a complete range of services to assure
     that the Corporate Information Systems are secure. The services are
     bundled as:

        Enterprise Controls Review
        Information Technology Security Services
        Network Audit
        Enterprise Consulting
        Training Services




     E-Governance Solutions

     The company has successfully deployed numerous applications for state
     and local government agencies in the US, India and other countries. Given
     the focus on E-Governance, the company has created a specialized group
     to handle E-Governance in various geographies.




24
End-to-End Solutions for IT Infrastructure

Today, the IT infrastructure environment has become highly heterogenous.
Further the number of desktops, number of applications and the number of
users trying to access the applications have all added to the complexity of
setting up, management and maintenance of IT Infrastructure. With a global
presence, business is required to be up 24x7 for all 365 days. The
dependence of business on IT infrastructure is total. Further secured access
anytime from anywhere through any medium is required to run business
operations.

ICICI Infotech takes a process view of IT infrastructure services and provides
end-to-end solutions to take care of the business needs in the complex
environment indicated above. The company is ISO 9001:2000 certified for its
IT infrastructure support capability.

In this area the company offers the following services:

  IT Facilities Management
  Network Management
  Data Centre Management including Disaster Recovery
  Security Services
  Storage & Server Management
  Database Management
  Microsoft Product Support & Services



Software Products
ICICI Infotech forayed into Products offering to complement its services
spectrum, to offer customers solutions that are highly scalable and
functionally rich and to cover end-to-end requirements of its customers. The
technology meltdown and subsequent shrink in IT budgets, opens doors for
IT companies to offer clients with solutions that can be implemented fast,
meets all their functional requirements and is adaptable to changing
business needs. The foray into products was made with the objective of
propelling ICICI Infotech higher up in the IT solutions value chain.

ICICI Infotech offers products for the Banking and Insurance industry and
ERP/CRM products.




                                                           25
     Banking Products
          TM




               TM




26
     TM




     TM




     TM




TM




          27
                                                                Arin Speed,
                                                       Electronic Communications
                                                               Associate
                                                    Management Sciences for Health
                                                              (MSH)

                                            We are pleased with the level of determination
                                          and commitment that ICICI Infotech has shown
                                          through the process to this point. They have
                                      made it a high priority, including spending four
                                      months onsite developing detailed product
                                     requirements with MSH staff members, to
                                    fully understand and ensure that the best
                                           practices found in the drug
                                      management field are captured
                                             in the software s
                                              functioning."




                        Ms. Chanda Kochhar,
                        Executive Director
                         ICICI Bank Ltd.

              ICICI Infotech is a significant supplier
                                                                 What
                                                                 clients say…
       of IT services to ICICI Bank. ICICI Infotech has
   consistently competed with other major IT services
 vendors for providing these services to ICICI Bank.
 We are happy with the professional approach of
ICICI Infotech for these services and with their
   adherence to service levels agreed on.
ICICI Infotech has also rendered help to
                                                              Ms Ghinwa Barathi,
 the Bank in planning for technology
                                                             Project Manager, IT
    inputs to drive the business
                                                            Emirates Bank Group
         requirements.

                                               Emirates Bank Group embarked on a group-wide
                                              rollout of middleware architecture and we were
                                           looking for skilled resources to assist us with the
                                         implementation. ICICI Infotech had the specialized
                                         Enterprise Application Integration skills and the
                                     experience in handling complex systems involving
                                      large volumes of data and its resources were a
                                   natural choice for us. Working together with our
                                  IT team they added great value to the ultimate
                                   architecture that we have in place today. In
                                 today’s competitive business environment,
                                  what clients are really looking for is a
                                 partner who is willing to do the extra
                                       work... and ICICI Infotech
                                          definitely did.


   30
                   James J. Moniello,
                       President
                    The Mathog
               & Moniello Companies

           What impressed me the most
     about ICICI Infotech was their people,
   their timely deliverables, they met the
   pricing structure and the way they
   captured our organization in its                                Sunil Talwar,
     holistic sense. They did a
                                                          Assistant General Manager –
        phenomenal job
                                                            Finance & Investments
  of putting it all together,
                                                          Qatar Insurance Company
      as promised.

                                                      Using PREMIA, we have been able
                                              to effectively consolidate our re-insurance and
                                            accounts between branches and Head Office.
                                        The true integration between Underwriting, Claims,
                                       Reinsurance and Accounting functions in PREMIA
                                  system together with the inbuilt data integrity features




oursay.
                                   in the system has been providing us the necessary
                                     management information as required. All our
                                support and maintenance related issues are being
                                    attended to and resolved in a timely and
                                  professional manner by the support and

clients                          development team at the PREMIA Help
                                    Desk and PREMIA R&D Centre.




                                Krishna Kumar,
                                 IT Manager
                              GlaxoSmithKline

                 The nature of working with ICICI Infotech
            has been good. We shared a good relationship
               over the past one year and were able to
          understand each other well. The Product will
          benefit our business as we will be able to
      get information of our distributors in real time.
    This will help us keep track of important issues
    such as stock situations, shipment statuses
   and secondary sales on an ongoing basis.
      The product is unique and as per
             our requirement.




                                                                   31
Evolution caused many changes in man, but could not enhance his
eyesight to meet the demands made on it. So man invented spectacles.
And then went on to improve his creation…
In an age gone by, trusted carrier pigeons faithfully delivered
the most important messages. Today, there are newer ways to
deliver, no matter what…
When you have something to say, you will find a way to say it. It s just that
today s methods are a lot easier than beating drums to make a point
There are many different currencies around the world. But they
have one thing in common they have all evolved from immortal
metal to intelligent plastic
                                   ICICI Infotech Limited
                              (Formerly ICICI Infotech Services Limited)

     DIRECTORS’ REPORT
     Your Directors have pleasure in presenting the tenth Annual Report of the Company
     with the audited statement of accounts for the year ended March 31, 2003.

     FINANCIAL HIGHLIGHTS & APPROPRIATIONS
     The Profit & Loss account shows a profit after taxation of Rs. 125.7 million. The
     disposable profit is Rs. 318.3 million, taking into account the balance of Rs. 271.6
     million brought forward from the previous year, subject to adjustments pertaining to
     that year. After taking into account the preference dividend of Rs. 131.2 million, the
     disposable profit available for equity shareholders works out to Rs. 187.1 million. As
     your Directors opine that funds are needed to augment the growth initiatives of the
     Company in the current financial year, a token dividend of 5% on equity shares is being
     recommended this year. Appropriation of the profit earned during the year is as given below:

                                                                                Rs. in million
                                                            Year ended           Year ended
                                                           March 31, 2003      March 31, 2002

     Income from Operations                                     1813.9              1,519.6

     Profit before tax                                             55.1               333.0

     Provision for taxation
     (Current and deferred)                                      (70.6)                96.3

     Profit after tax                                            125.7                236.7

     Balance brought forward from Previous year                  271.6                254.8

     Deferred Market development and Support expenses
     pertaining to previous year                                   79.0                    -

     Transfer from Debenture Redemption Reserve                       -                 3.2

     Profit available for distribution                           318.3                494.7

     Transfer to General Reserve                                      -                30.0

     Dividends – Equity shares
     (Incl. Corporate dividend tax)                                17.4               185.3

     Deferred tax liability                                           -                 7.8

     Interim Dividend – Preference shares                        131.2                     -

     Balance carried to Balance Sheet                            169.7                271.6




58
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

OPERATIONAL REVIEW
This financial year threw tremendous challenges to the Indian IT industry, as it
witnessed certain adverse developments coupled with the consequences of continued
recessionary trends in global economy.

Amidst this environment, the Company took appropriate strategic re-alignment
measures to re-position itself and run profitably. As a result, during the year under
review, your Company achieved a turnover of Rs. 1793.7 million, as against Rs. 1467.2
million in the previous year, recording an increase of 22%. However, the profit after tax
decreased by 47% to Rs. 125.7 million from Rs. 236.7 million, which is on account of
expenditure on major marketing and other initiatives taken in the previous year, to
emerge as a significant player in the international arena.

REPOSITIONING STRATEGY
In line with the other major IT players in the Indian market, the Company started as an
IT services company. In the first two years of operations ended March 2001, through
acquisitions, the Company expanded rapidly into IT services space, particularly in the
US market. With the downturn in the US market for technology services during 2001-
02, the Company started re-positioning itself as an IT solutions (comprising products
and services) company rather than a pure IT services company.

In line with this re-positioning exercise, during the year quite a number of new products
have been added to the Company’s basket of product offering; the new products being
in the area of Corporate banking, Retail banking, Insurance, Enterprise relationship
management etc. With these additions, the Company has end to end solutions for the
banking industry, end to end solutions for insurance industry, ERP and ERM solutions
for verticals such as manufacturing, retail and distribution, contracting etc. Very few
companies around the world have such a wide range of product offering. The Company
also strengthened its services offering by starting a security services division, providing
managed services and certain niche services to the government sector.

Further, to mitigate the geography risk apart from US, your Company has established
direct presence in Europe, Middle East, India, Far East and Australia and presence
through resellers in Africa.

With the unique positioning in terms of product and services offering and with the
geographic reach that has been established during the last couple of years, the
platform for future growth has been put in place. Further, during the year a lot of efforts
have been made towards brand building and marketing across geographies. The
Company has also put in place various processes to support customer acquisition and
retention across geographies.

This strategy of offering both services and products, has enabled the Company to
quickly make forays into the new markets and spot business opportunities.




                                                                     59
                                ICICI Infotech Limited
                           (Formerly ICICI Infotech Services Limited)

     SUBSIDIARY COMPANIES
     With a view to have better control and contain administrative costs, the Company,
     during the year, initiated certain measures to consolidate the operations of its
     subsidiaries with its branches. Accordingly winding up process of the subsidiary
     companies viz. Command International Software Pvt. Ltd., Command International
     Holdings LLC., and Tricolour Infotech International Inc. was initiated.

     ICICI Infotech SDN BHD was incorporated in Malaysia as a subsidiary of ICICI Infotech
     Pte. Ltd, to aggressively target financial service conglomerates and the government
     sectors in Malaysia.

     Presently, the Company has following subsidiaries, viz. ICICI Infotech Inc., USA, ICICI
     Infotech Pte. Ltd, Singapore, ICICI Infotech Pty. Limited, Australia and ICICI Infotech
     SDN BHD, Malaysia.

     The audited statements of accounts of the Company's subsidiaries, together with the
     Report of the Directors and Auditors, as required under Section 212 of the Companies
     Act, 1956, are attached.

     JOINT VENTURES
     During the year, your Company has set -up a 50:50 Joint Venture (JV) Company in the
     name Semantik Solutions GmbH (Semantik), with Fraunhofer – ISST, a leading institute
     of applied research in Germany to carry on the business of owning, licensing and
     marketing commercial software products to be developed jointly. While the
     organisation and the strategy are in place, we expect that Semantik would transform
     into a significant player in the German IT market, in the coming years.

     CAPITAL
     In view of the changing interest rate scenario, a capital re-structuring was carried out
     during the financial year by redemption of the existing 260 million, 9.85% Redeemable
     Preference shares of Rs. 5/-each and issue of 300 million, 6.35% Redeemable
     Preference shares of Rs. 5/-each. During the year under review, the Company allotted
     768,535 equity shares of Rs. 5/- each to Emirates Bank International PJSC and 10,200
     equity shares of Rs. 5/- each to the employees under Employee Stock Option Scheme.

     EMPLOYEE STOCK OPTIONS
     The Company continued to reward its outstanding employees and make them partners
     in growth by grant of stock options under its Employee Stock Option Scheme.
     Based on the performance of the employees during fiscal 2003, in April 2003 your
     Company granted about 1,128,000 options to the eligible employees at an exercise
     price of Rs. 45/- per share, as per the terms and conditions of vesting laid down in the
     said scheme.

     Out of the total 6,234,100 options granted since the inception of the scheme,
     2,962,592 options vested in the employees, of which 20,420 options were exercised
     against which equal number of shares in the Company were allotted to them.




60
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

QUALITY
Quality has been topmost priority for your Company since inception. The Company has
always adopted a process centric approach in all its activities. Its software
development activities have already been assessed at SEI CMM Level 3 and all non-
software businesses have been ISO9001: 2000 certified.

The Company has initiated effective measures to achieve the assessment at SEI CMM
Level 5 by 3rd quarter of 2003. Quality of the deliverables is ensured through reviews
within the project team and also through an independent organisation level function of
Software Quality Assurance.

PUBLIC DEPOSITS
During the year, the Company has not accepted any deposit under Section 58-A of the
Companies Act, 1956.

DIRECTORS
Mr. K.V. Kamath, Chairman, Ms. Lalita D. Gupte and Ms. Kalpana Morparia, Directors,
resigned from the Board effective July 23, 2002 in compliance of banking regulations
and other statutory obligations. The Board of Directors place on record its appreciation
for the strategic direction, guidance and support received from these Directors during
their association with the Company, which has enabled the Company to grow and
reach the current position.

During the year, the Board decided to relocate Mr. V. Srinivasan, Managing Director and
CEO to ICICI Infotech Inc., USA in view of the need to provide better strategic direction
and exercise operational control for aggressively pursuing the US business of the
Company. This gave rise to a need of delegating responsibility for effective functioning
of the Indian operations and creating a singular leadership based in India with certain
operational powers. The Board appointed Mr. Manoj Kunkalienkar as Executive Director
of the Company. Mr. Kunkalienkar is an M.Tech from IIT, Mumbai and had been
employed with the Company since 1999. Mr. Kunkalienkar will hold office upto the
conclusion of the forthcoming Annual General Meeting. The Company has received
notice under Section 257 of Companies Act, 1956, recommending his appointment as
the Director of the Company. The Board recommends his appointment as Director
eligible to retire by rotation.

In terms of the provisions of the Articles of Association of the Company, Mr. Vijay
Thacker is due to retire by rotation at the forthcoming Annual General Meeting of the
Company and being eligible, offers himself for re-appointment.

AUDIT COMMITTEE
The Audit Committee of the Board, comprising of its Chairman, Mr. Vijay Thacker, Mr.
Balaji Swaminathan and Mr. V. Srinivasan as Members, has been instrumental in
strengthening corporate governance practices. The contribution of the Internal Auditors
and Statutory auditors of the Company has been commendable. During the year, the
Committee met four times to review quarterly accounts, internal control systems,
discuss the audit findings and recommendations of the internal and statutory auditors.




                                                                   61
                               ICICI Infotech Limited
                          (Formerly ICICI Infotech Services Limited)

     AUDITORS
     The Auditors, M/s. Lodha & Co., Chartered Accountants, Mumbai, are due to retire at
     the ensuing Annual General Meeting. Your Directors recommend the re-appointment of
     M/s. Lodha & Co., Chartered Accountants as Auditors of the Company for the financial
     year 2003-04.

     FOREIGN EXCHANGE EARNING AND EXPENDITURE
     During 2002-03, the expenditure in foreign currencies amounted to Rs. 664 million on
     account of import of capital goods, dividend, travelling & other expenses. During the
     same period, the Company earned Rs. 607.7 million in foreign currencies, as income
     from its exports.

     TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION
     Company being primarily in the Information Technology domain, ongoing efforts are
     always underway to explore, learn and absorb emerging technologies. The Company
     imparts its employees training on the new technologies for deploying on the
     development projects as deemed appropriate for the business of the Company.

     During the year, your Company has widened its spectrum of middleware expertise. The
     year saw enormous increase in the area of enterprise application integration with live
     projects integrating complex heterogeneous systems. This put the Company as a
     strong contender in the system integration market.

     The Company also built expertise in the area of Knowledge Management portal & tool
     with the help of our relationship with Fraunhofer. Your Company leveraged considerably
     on the relationship built during the year with technology partners to provide solutions
     and services in diverse technology and domain areas.

     During the year, your Company also implemented video conferencing facilities to
     connect its geographies and employees across various offices. Your Company in tie-
     up with telecom service providers has established VOIP (voice over IP) communication
     system across various offices worldwide.

     With a view to enhance resource base for development of software to meet customer
     expectations, your company has made significant addition to the servers and printers.
     Adequate steps have also been taken in the direction of security and disaster recovery.

     The aforesaid steps have enabled the Company to effectively provide services to
     its customers.

     PERSONNEL
     As required by the provisions of Section 217 (2A) of the Companies Act, 1956,
     read with the Companies (Particulars of Employees) Rules, 1975, as amended, the
     names and other particulars of the employees are set out in the annexure to the
     Directors’ Report.




62
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

OTHER DISCLOSURES
Since your Company does not own any manufacturing facility, the disclosure of
information relating to conservation of energy to be disclosed in terms of Section 217
(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in preparation of the annual accounts, the applicable accounting standards
   have been followed along with proper explanation relating to material departures;
2. that the Directors have selected such accounting policies and applied them
   consistently and made judgments and estimates that are reasonable and prudent so
   as to give a true and fair view of the state of affairs of the Company at the end of
   the financial year and of the profit of the Company for that period;
3. that the Directors have taken proper and sufficient care 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,
4. that the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS
The Company is grateful to its clients, bankers, Securities & Exchange Board of India,
Reserve Bank of India, Software Technology Park of India, SICOM, Customs and other
government authorities for their continued support.

The Company would like to express its gratitude for the unstinted support and
guidance received from the ICICI group, our Joint Venture and alliance partners and
vendors.

The Directors would also like to express their sincere thanks and appreciation to all the
employees for their commendable teamwork and professionalism. Finally, the Directors
wish to express their gratitude to the Members for their continued support.

For and on behalf of the Board




V. Srinivasan
Managing Director & CEO

Navi Mumbai, April 17, 2003




                                                                   63
                                  ICICI Infotech Limited
                            (Formerly ICICI Infotech Services Limited)

                                                                         Lodha & Company
                                                                         Chartered Accountants
                                                                         6, Karim Chambers,
                                                                         40, A. Doshi Marg,
                                                                         (Hamam Street),
                                                                         Mumbai- 400 023.
     Auditors’ Report

     To,
     The Members of ICICI Infotech Limited
     (Formerly ICICI Infotech Services Limited)

     1. We have audited the attached Balance Sheet of ICICI Infotech Limited (formerly ICICI
        Infotech Services Limited) as at March 31, 2003 and also the Profit and Loss Account of
        the Company for the year ended on that date annexed thereto and the cash flow statement
        for the year ended on that date. These financial statements are the responsibility of the
        Company’s management. Our responsibility is to express an opinion on these financial
        statements based on our audit.

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

     3. As desired by the Manufacturing and Other Companies (Auditor’s Report) Order, 1988,
        issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act,
        1956 (hereinafter referred to as the “Act”), we enclose in the Annexure, a statement on
        the matters specified in paragraphs 4 & 5 of the said Order, to the extent applicable.

     4. Further to our comments in the Annexure referred to in the paragraph 3 above, we report
        that:
        i) We have obtained all the information and explanations which to the best of our
           knowledge and belief were necessary for the purposes of our audit.

        ii) In our opinion, proper books of account as required by law have been kept by the
            Company so far as it appears from our examination of those books and proper returns
            adequate for the purposes of our audit have been received from the branches not
            visited by us. The Branch Auditor’s Report have been forwarded to us and have been
            appropriately dealt with.

        iii) The Balance Sheet and the Profit and Loss Account dealt with by this report
             are in agreement with the books of account and with the audited returns from the
             Branches.




64
                               ICICI Infotech Limited
                          (Formerly ICICI Infotech Services Limited)

       iv) In our opinion, the Balance Sheet and the Profit and Loss Account have been prepared
           in compliance with the Accounting Standards referred to in Section 211(3C) of the
           Act, to the extent applicable.

       v) On the basis of written representations received from the directors, as on March 31,
          2003 and taken on record by the Board of Directors, we report that none of the
          directors is disqualified as on March 31, 2003 from being appointed as a director
          under Section 274 (1)(g) of the Act.

       vi) In our opinion and to the best of our information and according to the explanations
           given to us, the said accounts read together with the Significant Accounting
           Policies and Notes to Accounts in Schedule ‘XV’ and other Notes appearing
           elsewhere in the accounts, give the information required by the Act, in the manner
            so required and give a true and fair view in conformity with the accounting
           principles generally accepted in India:
           a) In the case of Balance Sheet, of the state of affairs of the Company as
              at March 31,2003;

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

          c) In the case of Cash Flow Statement, of the Cash Flows of the Company for
             the year ended on that date.

          For LODHA & COMPANY
          Chartered Accountants


          N. KISHORE BAFNA
          Mumbai,
          Dated: April 17, 2003

Annexure referred to in paragraph 3 of our report of even date to the members of ICICI
Infotech Limited
i) The Company has maintained proper records showing full particulars including
     quantitative details and situation of fixed assets. The fixed assets have been
     physically verified by the management at reasonable intervals during the year
     and no material discrepancies were noticed on such verification.

ii)     None of the fixed assets have been revalued during the year.

iii)    The Inventories have been physically verified by the management at reasonable intervals.

iv)     In our opinion and according to the information and explanations given to us, the
        procedures of physical verification of inventories followed by the management were
        found reasonable and adequate in relation to the size of the Company and the nature
        of business.




                                                                         65
                                   ICICI Infotech Limited
                             (Formerly ICICI Infotech Services Limited)

     v)    No discrepancies were noticed on physical verification of inventories as compared to
           book records.

     vi)   On the basis of our examination of the inventory records, in our opinion, the valuation
           of Inventory is fair and proper in accordance with the normally accepted accounting
           principles.

     vii) The Company has not taken any loans, secured or unsecured, from companies, firms
          or other parties listed in the Register maintained under Section 301 of the Act, and from
          the companies under the same management as defined under Section 370
          (1-B) (non-operative) of the Act.

     viii) The Company has granted an unsecured loan to a Company listed in the register
           maintained under Section 301 of the Act., the rates of interest and other terms and
           conditions of which are prima facie, not prejudicial to the interest of the Company.
           The Company has also not granted any loan to companies under the same management
           as defined under Section 370 (1-B) (non-operative) of the Act.

     ix)   In respect of loans and advances in the nature of loans given by the Company, the
           parties / employees are regular in payment of principal amount and interest as stipulated.

     x)    In our opinion and according to the information and explanations given to us,
           having regard to the explanation that some of the services rendered are of
           special nature and suitable alternate sources do not exist for obtaining comparable
            quotations, there are adequate internal control procedures commensurate with
           the size of the Company and the nature of it’s business with regard to purchase of
           plant and machinery, equipment and other assets and for the sale of services.

     xi)   There are no transactions of purchase of goods and materials and sale of goods,
           materials and services with the parties listed in the register maintained under Section
           301 of the Act.

     xii) The Company has not accepted any fixed deposits from the public within the meaning
          of Section 58A of the Act and the Rules framed thereunder.

     xiii) The Company is generally regular in depositing the Provident Fund and ESIC dues with
           appropriate authorities.

     xiv) The Company has an internal audit system commensurate with the size and
          nature of its business.

     xv) There were no undisputed amounts payable in respect of Income Tax, Wealth
          tax, Sales Tax, Customs Duty and Excise Duty outstanding as at 31st March, 2003 for
          a period of more than six months from the date they became payable.
     xvi) On the basis of our examination of the Books of Account, the vouchers produced to
          us for our verification, the explanations given and representations made to us on our




66
                             ICICI Infotech Limited
                       (Formerly ICICI Infotech Services Limited)

    inquiries and the check and control relating to authorising the expenditure on the basis
    of contractual obligations to the employees / directors, accepted business practices
    having regard to the Company's needs and exigencies, we have not come across any
    expenses charged to revenue, which in our opinion and judgement and to the best of
    our knowledge and belief, could be regarded as personal expenses.

xvii) Considering the nature of services rendered, the Company has a reasonable
      system of recording receipts, issues and consumption of stationery materials and of
      allocating man hours utilised to the relative jobs, which is commensurate with the size
      and nature of its business. As explained to us, there is a reasonable system of
      authorization at proper levels and an adequate system of internal control commensurate
      with the size of the Company and the nature of its service activities, on issue of
      stationary material and allocation of materials and man hours to the relative Jobs.

    For LODHA & COMPANY
    Chartered Accountants



    N. KISHORE BAFNA
    Mumbai,
    Dated : April 17, 2003




                                                                      67
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Balance Sheet
AS AT MARCH 31, 2003
                                                                                                       Rupees in million
                                                                                      As at                 As at
                                                                 Schedule         March 31, 2003         March 31, 2002

I.    SOURCES OF FUNDS
1.    Shareholders' Funds :
A.    Share Capital                                                  I               1,809.78                 1,605.88
B.    Reserves & Surplus                                             II               279.28                    509.76

                                                                                     2,089.06                 2,115.64
2. Loan Funds :
A. Secured Loans                                                    III                238.08                   101.50
B. Unsecured Loans                                                  IV                 236.82                        -
                                                                                       474.90                   101.50
                                                                                     2,563.96                 2,217.14
II.   APPLICATION OF FUNDS
1.    Fixed Assets :                                                 V
A.    Gross Block                                                                    1,526.91                 1,205.27
B.    Less : Depreciation                                                              347.31                   199.34
C.    Net Block                                                                      1,179.60                 1,005.93
D.    Capital Work-in-Progress                                                         120.69                   104.18
                                                                                     1,300.29                 1,110.11

2. Investments                                                      VI                 860.67                   826.48

3.    Current Assets, Loans and Advances :                          VII
A.    Current Assets :
a.    Inventories                                                                        4.52                        -
b.    Sundry Debtors                                                                   444.76                   402.81
c.    Cash and Bank Balances                                                            40.33                    36.04

B. Loans and Advances                                                                  375.57                   357.79
                                                                                       865.18                   796.64
      Less: Current Liabilities                                     VIII               439.57                   523.00
      Net Current Assets                                                               425.61                   273.64

4. Deferred Tax Liability                                                             (34.59)                  (131.27)

5. Miscellaneous Expenditure                                        IX                  11.98                   138.18
   (To the extent not written off or adjusted)
                                                                                     2,563.96                 2,217.14
      Significant Accounting Policies                               XV
         and Notes to Accounts
      Cash Flow Statement                                           XVI


Schedules referred to above form an integral part of the financial statements
As per our attached report of even date          For and on behalf of the Board
For LODHA & COMPANY,
Chartered Accountants                            V. Srinivasan                        Vijay Thacker
                                                 Managing Director & CEO              Director, Chairman Audit Committee
N KISHORE BAFNA
Partner                                          Amar Chintopanth                     S.R. Shettigar
Mumbai, April 17, 2003                           Chief Financial Officer              Company Secretary



68
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Profit and Loss Account
FOR THE YEAR ENDED MARCH 31, 2003
                                                                                         Rupees in million
                                                                         For the year        For the year
                                                    Schedule               ended             ended
                                                                        March 31, 2003    March 31, 2002

INCOME:
Income from Operations                                 X                   1,793.67           1,467.23
Other Income                                          XIII                    20.30              52.33
Total Income                                                               1,813.97           1,519.56

EXPENDITURE:
Cost of Revenues                                       XI                   953.77              591.68
Selling, General and
      Administrative Expenses                         XII                   360.42              253.31
Interest                                              XIV                    38.55              126.80
Depreciation (Refer Note No.2.6 in Schedule XV)        V                    171.05              121.13

Total Expenditure                                                          1,523.79           1,092.92

Profit before Market development and support                                290.18              426.64
expenses, Taxation and Extraordinary items

Market development and support expenses                        360.00                                 -
    Less: Adjusted from Opening balance of
    Profit and Loss Account                                    124.88       235.12               93.66
     (Refer Note No.2.15 in Schedule XV)


Profit Before Taxation and Extraordinary items                                55.06             332.98

Provision for Taxes
     - Deferred Taxes (assets) / Liability (net)                            (50.78)              69.54
     - Current Taxes                                                           4.95              26.72
     - Reversal of provision for taxes
       pertaining to earlier years                                          (24.78)                   -

Profit After Taxation before Extraordinary items                            125.67              236.72

Extra Ordinary item:

Write down in the value of Investment                                             -           1,250.00
Less: Transferred from Securities Premium Account                                 -          (1,250.00)

Profit After Extra Ordinary Items                                           125.67              236.72

Add: Balance Brought Forward from the
    Previous Year                                                           271.59              254.83

Less: Adjusted to Market development and support
      expenses pertaining to previous year                     124.88

Less : Deferred Tax liability on the above                      45.90         78.98
Add: Transferred from Debenture Redemption Reserve                                -                3.20

Disposable Profit                                                           318.28              494.75
                                                                                                …Cont’d


                                                                                                          69
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Profit and Loss Account (Cont’d…)
FOR THE YEAR ENDED MARCH 31, 2003
                                                                                                  Rupees in million
                                                                                 For the year           For the year
                                                     Schedule                       ended              ended
                                                                                March 31, 2003     March 31, 2002

Appropriations:

General Reserve                                                                           -                30.00
Dividends - Equity Shares                                                             15.41               168.23
Corporate Dividend Tax                                                                 1.97                17.16
Deferred Tax Liability                                                                    -                 7.77
Interim Dividends - Preference Shares                                                131.22                    -
(subject to deduction of tax at source)
Balance carried to Balance Sheet                                                     169.68               271.59
                                                                                     318.28               494.75
Earnings per Share
(Equity shares, par value Rs 5 each)
Basic (Rs.)                                                                           (0.09)                3.87
Diluted (Rs.)                                                                         (0.09)                3.65

Significant Accounting Policies
    and Notes to Accounts                                XV

Cash Flow Statement                                     XVI




Schedules referred to above form an integral part of the financial statements
As per our attached report of even date     For and on behalf of the Board
For LODHA & COMPANY,
Chartered Accountants                       V. Srinivasan                        Vijay Thacker
                                            Managing Director & CEO              Director, Chairman Audit Committee
N KISHORE BAFNA
Partner                                     Amar Chintopanth                     S.R. Shettigar
Mumbai, April 17, 2003                      Chief Financial Officer              Company Secretary




70
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                                      Rupees in million
                                                                                      As at                 As at
                                                                                  March 31, 2003       March 31, 2002

I    Share Capital

     Authorised
     100,000,000 (as at March 31, 2002 - 100,000,000)
     Equity shares of Rs. 5 each                                                         500.00              500.00

     300,000,000 ( as at March 31, 2002 - 300,000,000 )
     Cumulative Preference shares of Rs.5 each                                         1,500.00             1,500.00
                                                                                       2,000.00             2,000.00

     Issued, Subscribed & Paid - up
     61,955,622 (as at March 31, 2002 - 61,176,887)
     Equity shares of Rs.5 each                                                          309.78              305.88

     260,000,000 (as at March 31, 2002 - 260,000,000)
     9.85% Cumulative Preference shares of Rs.5 each *                                         -            1,300.00

     300,000,000 - 6.35% Cumulative Preference
     shares of Rs.5 each **                                                            1,500.00                    -
                                                                                       1,809.78             1,605.88


Notes :
1. Out of the above, 40,001,400 Equity shares are allotted as fully paid-up Bonus shares by capitalisation of Securities
    Premium Account and accumulated profits.

2.   * Preference shares were redeemed at a premium in March 2003.

3.   ** Preference shares are redeemable at par on expiry of nine years period from the date of allotment i.e. March
     31, 2003.




                                                                                                                       71
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                              Rupees in million
                                                                                 As at             As at
                                                                             March 31, 2003   March 31, 2002

II Reserves & Surplus

a    Capital Reserve ( on merger )
     Balance as per last Balance Sheet                                              0.58                 0.58

b    Securities Premium Account
     Balance as per last Balance Sheet                                           207.59               364.76

     Add : Received on allotment of equity shares during the year                 73.53              1,092.83

     Less : Utilised towards premium paid on redemption of                       202.10                        -
     preference shares

     Less : Adjusted towards writeoff in investment in ICICI Infotech Inc.             -             1,250.00

     Closing Balance                                                              79.02               207.59

c    Debenture Redemption Reserve
     Balance as per last Balance Sheet                                                 -                 3.20

     Less : Transferred to General Reserve                                             -                 3.20

     Closing Balance                                                                   -                    -

d    General Reserve
     Balance as per last Balance Sheet                                            30.00                53.96

     Add : Additions during the year                                                   -               30.00

     Less : Adjusted towards Deferred                                                  -               53.96
     tax liability of earlier years

     Closing Balance                                                              30.00                30.00

e    Profit and Loss Account
     Balance as per annexed account                                              169.68               271.59

     Total                                                                       279.28               509.76




72
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                                      Rupees in million
                                                                                       As at               As at
                                                                                   March 31, 2003      March 31, 2002

III   Secured Loans

      From Banks:
      Rupee Term Loans                                                                    88.30                     -

      Hire Purchase Finance                                                                    -                1.62

      Cash Credit                                                                        149.78                     -

      From Others : Rupee Term Loans                                                           -               99.88

                                                                                         238.08               101.50

Notes :
1. Security and terms & conditions for Rupee Term Loans :
    a. Rs.77.56 million ( as at March 31, 2002 - 50 million ) loan is secured by way of assignment (Equitable Mortgage)
        of lease hold rights of the office premises situated at Navi Mumbai, repayable over 10 years.

      b. Rs.10.74 million (as at March 31, 2002-Nil) loan is secured by way of charge on company owned vehicles, repayable
         over 5 years

2.    Cash Credit is secured by way of floating charge on book debts.


IV    Unsecured Loans

      Rupee Term Loans (short term)

      From Banks                                                                         236.82                     -
                                                                                         236.82                     -




                                                                                                                        73
74
     Schedules forming part of the Accounts
     V Fixed Assets

                                                   GROSS BLOCK                               DEPRECIATION / AMORTISATION                    NET ASSETS
                                                Additions     Ded / Adj                                       Ded / Adj
         Particulars                 As at      during the   during the      As at       Upto      For the    during the     Upto         As at       As at
                                  April 1, 2002   year          year        March 31   March 31,    year        year        March 31     March 31    March 31,
                                                                              2003       2002                                 2003         2003        2002

       Land
       - Freehold                      20.88            -               -      20.88           -         -              -           -        20.88       20.88
       - Leasehold                      5.24            -               -       5.24        0.14      0.09              -        0.23         5.01        5.10
       Buildings
       - Owned                         10.86        1.30                -      12.16        0.63      0.18              -       0.81        11.35        10.23
       - Leasehold                   223.76        60.30                -     284.06       12.83      7.63              -      20.46       263.60       210.93
                                                                                                                                                                                                                      ICICI Infotech Limited




       Plant & Machinery /
       Electrical Installations      116.97         1.90          0.41        118.46        8.06      5.60          0.08       13.58       104.88       108.91
       Computers                     234.17        21.46         59.12        196.51       82.62     30.18        21.52        91.28       105.23       151.55
       Software Products *           373.27       216.06         28.39        560.94       60.47     96.51              -     156.98       403.96       312.80
       Furniture & Fixtures            93.06       13.60          0.19        106.47       16.31      7.21          0.22       23.30         83.17       76.75
       Office Equipment                26.26        5.26          0.69         30.83        3.09      1.69          0.21        4.57        26.26        23.17
       Vehicles                       17.61         2.12          4.85         14.88        2.15      1.57         1.05         2.67        12.21        15.46
                                                                                                                                                                         (Formerly ICICI Infotech Services Limited)




       Business &
       Commercial
       Rights / Goodwill               83.19       93.29             -        176.48      13.04      20.39            -        33.43        143.05       70.15
       Total                        1,205.27      415.29         93.65      1,526.91     199.34     171.05        23.08       347.31      1,179.60    1,005.93

       Previous year                 896.62       321.83        13.18       1,205.27       81.22    121.13         3.01       199.34     1,005.93

       Capital work -
       in - Progress                 104.18       377.57        361.06        120.69                                                       120.69        104.18

     Notes :
     1. Buildings- Leasehold include:
        (i) Rs 206.71 million (Gross as at March 31, 2002-Rs.156.17million), Accumulated Depreciation-Rs.8.01 million (as at March 31, 2002-Rs.5.34 million) and Net
             value - Rs.198.70 million (as at March 31, 2002-Rs.150.83 million) being lease premium paid in respect of building taken on lease for sixty years.
        (ii) Rs. 77.35 million (Gross as at March 31, 2002 - Rs.67.59 million), Accumulated Depreciation-Rs.11.68 million (as at March 31, 2002-Rs.7.49 million) and
             Net Block-Rs.65.67 million (as at March 31, 2002-Rs. 60.10 million) being the cost of improvement on leasehold building.
     2. Additions to Software products include two software products ‘Spot on Suite’ of Rs.20.00 million and ‘Cross Roads’ of Rs 17.08 acquired byCompany     the
        during the year alongwith the existing contracts.
     3. Motor vehicles of Rs.0.05 million (Gross as at March 31, 2002 - Rs.1.51 million), Accumulated Depreciation - Rs. 0.01 million (as at March 31, 2002 - Rs. 0.09
        million) and Net value - Rs. 0.04 million (as at March 31, 2002 - Rs.1.42 million) are yet to be transferred in the name of the Company.
     4. *Deletion represents reclassification to Capital Work - in - Progress.
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                                      Rupees in million
                                                                                         As at             As at
                                                                                     March 31, 2003    March 31, 2002

VI   Investments
     (Unquoted and Fully Paid-up)
     Long Term Investments
     Trade :
     i In Subsidiary Companies

        42,275,000 Non-assessable share of US$ 0.30 (as at March 31,                     716.61              1,966.61
        2002 - US$0.30) each of ICICI Infotech Inc., USA
        Less : Write down in the value                                                        -              1,250.00
                                                                                         716.61                716.61

        1,000,000 Non-assessable share of US$ 0.01
        each of ICICI Infotech Inc., USA                                                   47.74                     -

        1,690,000 (as at March 31, 2002 - 1,000,000) Equity shares of
        S $1 each of ICICI Infotech Pte Ltd., Singapore                                    44.28                25.85

        800,000 (as at March 31, 2002-400,000) Ordinary shares of
        US$1 each of Tricolour Infotech International Inc., Mauritius                      34.55                18.36

        584,731 Equity shares of AUS $1 each of ICICI Infotech Pty Ltd., Australia         15.86                     -

     ii. In Joint Ventures
         1 Equity Share of Euro 12500 of Semantik Solutions GmbH, Germany                   0.61                     -

     Non-Trade :
     iii. In Other companies

        200,000 Equity Shares of Srilankan Rs.10 each of First Capital                      1.02                     -
        Asset Management Co. Ltd., Sri Lanka

     iv. In Mutual Funds
     - Units of Prudential ICICI Gilt Fund - Treasury Plan Dividend                            -                 2.50
         (as at March 31,2002 - 250000)
     - Units of Templeton India Government Securities Fund Dividend Plan                       -                 2.50
         (as at March 31,2002-244307.63)

     Current Investments
     Non-Trade :
     In Mutual Funds
     - Units ( as at March 31,2002 - 5,132,405)                                                -                60.66
        of Prudential ICICI Liquid Plan Dividend Option
                                                                                         860.67               826.48

     Aggregate repurchase price of Units of Mutual Funds                                       -                65.95

     Aggregate Book value of Units of Mutual Funds                                             -                65.66

Notes:
1. During the year, the Company has purchased 26,889,387 (for the year ended March 31,2002- 86,503,771) and sold
    32,043,442 ( for the year ended March 31, 2002 -81,432,073) units of Prudential ICICI Liquid Plan Dividend Option.



                                                                                                                    75
ICICI Infotech Limited
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Schedules forming part of the Accounts
                                                                                                                   Rupees in million
                                                                                                      As at             As at
                                                                                                  March 31, 2003    March 31, 2002

VII   Current Assets, Loans and Advances
      A Current Assets
      a) Inventories                                                                                     4.52                    -
      b) Sundry Debtors *
         (Unsecured, considered good unless otherwise stated)
      i. Debts outstanding for more than six months                                                    32.13                  3.83
         (net of doubtful debts fully provided for-Rs.9.87 million; Previous year- Nil)
      ii. Other debts                                                                                 412.63                398.98
         (net of doubtful debts fully provided for-Rs.1.07 million; Previous year-Nil)
                                                                                                      444.76                402.81
         * Debtors include Unbilled Revenue of Rs.57.32 million; Previous year-Rs.32.76 million

      c) Cash and Bank Balances
      i. Cash on hand                                                                                    0.30                 0.20
      ii. Balances with scheduled banks:
          in current accounts *                                                                        22.81                 18.42
          in EEFC accounts                                                                              0.42                  8.32
          in deposit accounts                                                                           0.09                     -
          in margin money accounts                                                                      7.74                  2.13
                                                                                                       31.06                 28.87

      iii. Balances with Non-scheduled banks:
           in current accounts with HSBC Bank Middle East                                                0.26                 0.35
         (Maximum balance held at any time during the year Rs.0.35
         million and for the year ended March 31, 2002- Rs 0.38 million)

         with TAIB Bank                                                                                     -                 0.27
         (Maximum balance held at any time during the year Rs.0.27
         million and for the year ended Mar 31, 2002- Rs0.27 million)

         with HSBC Bank                                                                                  1.50                 3.11
         (Maximum balance held at any time during the year Rs.4.19
         million and for the year ended March 31, 2002- Rs 9.92 million)

         with Emirates Bank International                                                                4.49                 2.57
         (Maximum balance held at any time during the year Rs.13.11
         million and for the year ended March 31, 2002- Rs 7.90 million)

         with HSBC Bank, London                                                                          0.30                 0.30
         (Maximum balance held at any time during the year Rs.3.27
         million and for the year ended March 31, 2002- Rs 3.27 million)

         with Bank of Baroda, London                                                                     2.23                    -
         (Maximum balance held at any time during the year Rs.5.34 Million
         and for the year ended March 31, 2002- Nil)

         in margin money accounts with ANZ Grindlays Bank                                                   -                 0.18
         (Maximum balance held at any time during the year Rs.0.18
         million and for the year ended March 31, 2002- Rs 0.18 million)

         with British Bank                                                                               0.19                 0.19
         (Maximum balance held at any time during the year Rs.0.19
         million and for the year ended March 31, 2002- Rs 0.19 million)
                                                                                                        8.97                  6.97
                                                                                                       40.33                 36.04
                                                                                                      489.61                438.85
         * Includes cheques on hand and remmittances - in - transit                                     8.12                 14.48




76
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                            Rupees in million
                                                                               As at             As at
                                                                           March 31, 2003    March 31, 2002

B     Loans and Advances
      (Unsecured, considered good)

Loans :
i.  To a subsidiary company                                                          -                34.07

ii.   To others (including employees)                                           65.84                 47.50

Advance tax and tax deducted at source                                          96.61                 55.42
(net of provisions of Rs.26.30 million; previous year Rs.266.14 million)

Deposits                                                                        53.14                 41.26

Advances recoverable in cash or in kind or for value to be received *          142.96                 52.90
(Refer Note No.2.13 In Schedule XV)


Advance against Share Capital - to subsidiaries                                 17.02               126.63
                                                                               375.57               357.79
                                                                               865.18               796.64

*Includes Interest receivable                                                    0.88                  0.40

VIII Current Liabilities

      Sundry creditors
      (Due to other than Small Scale Industrial Undertakings)                  416.32               514.32

      Interest accrued but not due                                               0.47                     -

      Other liabilities                                                         22.78                 8.68
                                                                               439.57               523.00

IX    Miscellaneous Expenditure
      (To the extent not written off or adjusted)

      Preliminary expenses                                                       0.05                  0.08

      Share issue expenses                                                      11.93                 13.22

      Deferred revenue expenditure
      (Market Development and Support expenses)
          Opening balance                                                      124.88                    -
          Add : Additions during the year                                      235.12               218.54
                                                                               360.00               218.54

           Less : Written off during the year                                  360.00                 93.66

          Closing balance                                                           -               124.88
                                                                                11.98               138.18




                                                                                                          77
ICICI Infotech Limited
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Schedules forming part of the Accounts
                                                                                   Rupees in million
                                                                      As at             As at
                                                                  March 31, 2003    March 31, 2002
X    Income from Operations
     Business Process Outsourcing Services                            454.12               661.97
     Software Development Services & Products                         915.55               576.19
     IT Infra Networking & Facilities Management                      274.00               229.07
     Compensation pertaining to Business Process                      150.00                     -
     Outsourcing Services ( Refer note no 2.14 in Schedule XV )
                                                                     1,793.67             1,467.23

XI   Cost of Revenues
     Cost of Outsourced services & boughtout items                    434.61               223.18

     Payments to and provisions for employees
     Salaries,bonus and other allowances                               507.16              348.27
     Contribution to provident and other funds                          35.47               28.67
     Staff welfare expenses                                             49.20               40.86
                                                                       591.83              417.80
                                                                     1,026.44              640.98
     Less : Transferred to Capital work-in-progress                     72.67               49.30
                                                                       953.77              591.68

XII Selling, General and Administrative Expenses
    Salary and allowances of support services                          46.41                 44.32
    Contribution to provident and other funds                           3.93                  1.58
    Staff welfare expenses                                             15.70                 13.30
    Rent                                                               48.35                 67.46
    Insurance                                                           7.79                  3.40
    Travelling and conveyance                                          85.81                 54.33
    Electricity and power consumption                                  16.89                 15.92
    Rates and taxes                                                    10.31                  3.42
    Communication expenses                                             27.89                 25.83
    Directors' fees                                                     0.08                  0.06
    Loss on sale of Fixed Assets (Net)                                  0.42                  3.46
    Loss on sale of Long Term Investments (Net)                            -                  2.04
    Printing and stationery                                            12.56                 10.84
    Repairs and maintenance - building                                  8.50                  6.27
    Foreign Exchange Loss ( Net)                                        4.64                     -
    Legal & professional charges                                       37.55                 25.31
    General office expenditure                                         29.08                 35.50
    Bank Charges                                                        2.80                  1.76
    Selling and distribution expenses                                  17.03                  2.84
    Bad debts written off                                              22.17                  3.26
    Provision for doubtful debts                                       10.94                     -
    Miscellaneous expenditure written off                               1.33                  0.47
    Miscellaneous expenses                                             12.98                  8.20
                                                                      423.16                329.57
     Less : Transferred to Capital work-in-progress                    62.74                 76.26
                                                                      360.42                253.31




78
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                                          Rupees in million
                                                                                             As at             As at
                                                                                         March 31, 2003    March 31, 2002


XIII Other Income
     Interest                                                                                   7.73                3.07
    (Gross, TDS Rs.0.40 million; for the year ended March 31, 2002 - Rs. 2.04 million)
    Dividend - Long Term Investments                                                              -                 0.21
    Dividend - Current Investments                                                             0.51                 3.06
    Profit on sale of current investments                                                      0.40                 0.18
    Credit balances / excess provision written back (net)                                         -                37.70
    Foreign Exchange Gain ( Net)                                                                  -                 3.46
    Miscellaneous income (includes rental income)                                             11.66                 4.65
    (Gross, TDS Rs.1.09 million; for the year ended March 31, 2002 - Rs.0.27 million)
                                                                                              20.30                 52.33


XIV Interest
    Interest - Term Loans                                                                     29.00                124.98
    Interest - Others                                                                          9.55                  1.82

                                                                                              38.55                126.80




                                                                                                                        79
80
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




     Current investments are carried at the lower of the cost and fair value and provision is made to recognise
     any decline in the carrying value.

1.6 Accounting for Taxes on Income
    Provision for income-tax is made on the basis of the estimated taxable income for the current accounting
    period in accordance with the Income - tax Act, 1961.

     Deferred tax resulting from timing differences between book and tax profits is accounted for under the
     liability method, at the current rate of tax, to the extent that the timing differences are expected to
     crystallize. Deferred tax assets are recognised and carried forward only if there is a reasonable certainty
     that they will be realised and are reviewed for the appropriateness of their respective carrying values at
     each balance sheet date.

1.7 Translation of Foreign Currency Items
    Transactions in foreign currency are recorded at the rate of exchange in force on the date of the
    transactions. Current assets and current liabilities denominated in foreign currency are translated at the
    exchange rate prevalent at the date of the Balance Sheet. The resultant gains/losses are recognised in
    the Profit & Loss Account except in cases where they relate to the acquisition of fixed assets in which
    case they are adjusted to the carrying cost of such assets. Overseas investments are recorded at the
    rate of exchange in force on the date of allotment.

     In respect of foreign branch- (a) revenue items are recorded at the average rates during the accounting
     period; (b) monetary items are translated at the exchange rates prevailing at the balance sheet date; and
     (c) non-monetary items are recorded at the exchange rate on the date of the transaction.

1.8 Accounting of Retirement Benefits
    The Company has for its employees in India, retirement benefits such as Gratuity, Superannuation and
    Provident Fund. The Gratuity and Superannuation are covered by a scheme with Life Insurance Corporation
    of India and the Provident Fund is administered through trustees. The Company’s contribution to these
    funds is charged to revenue. Liability for leave encashment is provided on the basis of the actuarial
    valuation at the year-end.

     In respect of employees in foreign branches, necessary provision has been made based on the applicable
     laws.

1.9 Amortization of Miscellaneous Expenditure
    Preliminary expenses and share issue expenses including expenses incurred on increase in authorized
    share capital are amortized over a period of ten years.

1.10 Borrowing Costs
     Borrowing costs directly attributable to acquisition, construction and production of assets are capitalised
     as a part of the cost of such asset upto the date of completion.
     Other borrowing costs are charged to the Profit & Loss Account.

1.11 Inventories
     Inventories are valued at lower of cost and net realisable value. Cost is computed on ‘first-in-first out’ basis.

2.   Notes to Accounts

2.1 Estimated amount of contracts remaining to be executed on capital account and not provided for (net
    of advances) Rs.36.70 million ( as at March 31, 2002 – Rs.54.04 million).



                                                                                                                81
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




2.2 Employee Stock Option Plan
    The Company’s Employees Stock Option Scheme –2000, provides for issue of equity option upto 25%
    of the paid-up Equity Capital to eligible employees. The scheme covers wholetime directors and the
    employees of the subsidiaries, the erstwhile holding company and subsidiaries of the erstwhile holding
    company, apart from the employees of the Company. The options vest in a phased manner over three
    years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of grant and
    the same can be exercised within ten years from the date of the grant at a price determined based on
    the valuation of equity shares.

     Employee Stock Option Plan

                                                                        As at               As at
                                                                     Mar 31, 2003        Mar 31, 2002

     Grants
     Outstanding as at beginning                                            3.94                2.12
     Add:Granted during the year                                            0.71                2.04
     Less: Forfeited during the year                                        0.43                0.22
     Outstanding as at end                                                  4.22                3.94

     Vested
     Outstanding as at beginning                                            1.33                0.42
     Add:Vested during the year                                             1.56                0.98
     Less: Exercised during the year                                        0.01                0.01
     Less: Forfeited during the year                                        0.16                0.06
     Outstanding as at end                                                  2.72                1.33

     Grants to Managing Director
     Outstanding as at beginning                                            0.14                0.07
     Add: Granted during the year                                           0.06                0.07
     Less:Forfeited during the year                                            --                  --
     Outstanding as at end                                                  0.20                0.14

     Vested to Managing Director
     Outstanding as at beginning                                            0.05                0.02
     Add: Vested during the year                                            0.07                0.04
     Less: Exercised during the year                                           --                  --
     Less: Forfeited during the year                                           --                  --
     Outstanding as at end                                                  0.12                0.05

2.3 Leases:
    a. Operating Lease:
    The Company has acquired Land and Building under a lease arrangement for a period of sixty years at a
    premium of Rs.4.96 million (as at March 31, 2002 – Rs.4.96 million) starting from December 4, 2000 for Land
    and Rs.156.17 million (as at March 31, 2002 – Rs.156.17 million) starting from March 13, 2000 for building
    and the same is being amortised over the lease period. During the year, the Company has acquired Building
    under lease for sixty years starting from March 1, 2003 for Rs.50.54 million and the same is amortised over
    the lease period. All other lease arrangements are renewable / cancelable at the Company’s and / or lessors’
    option as mutually agreed.




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ICICI Infotech Limited
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      b. Financial Lease:
      There were no financial leases entered into by the Company.

2.4 The Company's operations comprise of Business Process Outsourcing Services; Software Development
    Services and Products; and IT Infrastructure, Networking & Facilities Management and these businesses
    have been considered as primary segments. The Profit & Loss account of the reportable segments is set
    out herebelow:

                                                                                              Rupees in million
                                                                          For the              For the
                                                                        year ended           year ended
                                                                       March 31, 2003       March 31, 2002
      Segment Revenues
      Business Process Outsourcing Services                                  454.12              661.97
      Software Development Services & Products                               915.55              576.19
      IT Infrastructure, Networking & Facilities
      Management                                                            274.00               229.07
      Total Revenues                                                       1643.67              1467.23

      Segment Results
      Business Process Outsourcing Services                                  228.95              454.94
      Software Development Services & Products                               121.50              132.32
      IT Infrastructure, Networking & Facilities
      Management Services                                                     48.54               90.67
                                                                             398.99              677.93
      Compensation received                                                  150.00                    -
                                                                             548.99              677.93
      Unallocable expenses
      Interest on loans                                                       38.55              126.80
      Depreciation                                                           171.05              121.13
      Other corporate and unallocable expenses                               304.63              149.35
      Operating Profit                                                        34.76              280.65
      Other Income                                                            20.30               52.33
      Profit Before Taxation and Extraordinary items                          55.06              332.98
      Less: Taxes                                                            (70.61)              96.26
      Profit After Taxes before Extraordinary items                          125.67              236.72
      Write down in the value of Investment                                        -            1250.00
      Less: Transferred from Securities Premium Account                            -           (1250.00)
      Profit after Extraordinary Items                                       125.67              236.72

i)    The segment operating profit is arrived at before allocating certain expenses to segments and such unallocable
      expenses are separately disclosed as ‘Other corporate and unallocable expenses’.

ii)   Considering the nature of the Company's business, the assets and liabilities cannot be identified to any
      specific business segment.




                                                                                                              83
ICICI Infotech Limited
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iii)   The business operations of the Company are largely concentrated in India. The bifurcation of the same is
       as under:
                                                                                                                   R
                                                                        For the            For the
                                                                      year ended         year ended
                                                                     March 31, 2003     March 31, 2002
       Revenue
         – India                                                          1187.82            1267.44
         – Overseas                                                        605.85             199.79

                                                                         As at              As at
                                                                     March 31, 2003     March 31, 2002
       Assets (net of liabilities)
         – India                                                          1164.97            1091.88
         – Overseas                                                        912.11             885.58

2.5 In the opinion of the Board, the investments, current assets, loans and advances are realizable at a value,
    which is at least equal to the amount at which these are stated, in the ordinary course of business.

2.6 During the year the Company aligned its policy on depreciation on fixed assets of its Dubai branch to accord
    with the rates prescribed under Schedule XIV of the Companies Act, 1956, as followed by the Company.
    Consequently the profit for the year before tax is higher by Rs. 2.48 million.

2.7 Deferred tax liability :
    The break - up of net deferred tax liability is as under:

                                                                         As at              As at
                                                                     March 31, 2003     March 31, 2002
       Deferred Tax Asset
         Expenses allowable on payment and others                            14.48               4.61
       Deferred Tax Liabilities
         Property and equipment
         (depreciation / amortization)                                       49.07            135.88
       Net Deferred Tax Liability                                            34.59            131.27

2.8 Earnings Per Share:
    The numerators and denominators used to calculate Basic and Diluted Earnings Per Share:
                                                                      As at               As at
                                                                 March 31, 2003      March 31, 2002
    Profit attributable to
    the Equity Shareholders (Rs. In million)            A                (5.79)            236.72
    Weighted average number of Equity Shares
    outstanding during the year (Nos.)                  B           61,638,153         61,170,074
    Diluted weighted average number of
    Equity Shares outstanding during                    C           66,028,069         64,768,573
    the year (Nos.)
    Nominal value of Equity Shares (Rs.)                                     5                    5
    Basic Earnings Per Share (Rs.)                     A/B               (0.09)               3.87
    Diluted Earnings Per Share (Rs.)*                  A/C               (0.09)               3.65
    *Diluted Earnings Per Share will remain the same as Basic Earnings Per Share, since profit attributable to
    equity share holders is negative.



84
             ICICI Infotech Limited
             (Formerly ICICI Infotech Services Limited)




             2.9 Managerial Remuneration: *

Rupees in million                                                                          For the            For the
                                                                                         year ended         year ended
                                                                                        March 31, 2003     March 31, 2002
                    Salaries, Bonus and other allowances                                    2.98               2.21
                    Contribution to Provident and Other Funds                               0.35               0.52
                    Monetary value of perquisites                                           0.15               0.54

                    1. *Excluding contribution to the gratuity fund and provision for the leave encashment and including monetary
                       value of the perquisites computed as per the Income - tax Rules, wherever necessary.
                    2. The above includes, remuneration paid to Managing Director upto June 30, 2002 and to Executive Director
                       from Oct 01, 2002 to March 31, 2003.

             2.10 Auditors’ Remuneration:

                                                                                           For the            For the
                                                                                         year ended         year ended
                                                                                        March 31, 2003     March 31, 2002
                 Audit Fees *                                                               1.14               0.53
                 Tax Audit Fees                                                             0.05               0.04
                 Certification Fees                                                         0.25               0.26
                 Other Services                                                             0.34               0.03
                 Re-imbursement of out of pocket expenses
                 (including service tax)                                                      0.05               0.04
                 in million
          Rupees Total                                                                        1.83               0.90
                 * including branch auditors’ fees of Rs.0.84 million.

             2.11 "Loans to Others (including employees)" includes loans due from an officer of the Company - Rs.2.31 million
                  (as at March 31, 2002 – Rs.2.44 million). The maximum amount outstanding on the above loan for the year
                  ended March 31, 2003 is Rs.2.44 million (as at March 31, 2002 – Rs.2.49 million).

             2.12 Amount of exchange difference (net) debited to Profit & Loss Account during the year is Rs.4.64 million (for
                  the year ended March 31, 2002 (net) credited – Rs. 3.46 million).

             2.13 During the year, the Company entered into an agreement to resell a Core Banking Software Product and
                  paid an non-refundable deposit of Rs.106.07 million which would be adjusted against sales commission
                  payable on sale of the product.

             2.14 On pre-determination of a long-term contract during the year in respect of 'Business Process Outsourcing
                  Services' with a customer, the Company has received compensation of Rs.150.00 million. The same has
                  been disclosed in Schedule X - " Income from Operations".

             2.15 The Company has engaged ICICI Infotech Inc. USA, its wholly owned subsidiary (Infotech Inc.) for providing
                  market development and sales support in the US, for software and implementation services for on-site
                  projects / products. As per the arrangement, the company remunerates Infotech Inc. on a cost plus basis
                  for the aforesaid services and all the revenues accrue to the Company.

                    The remuneration has been arrived at on the basis of a transfer pricing study carried out by an independent
                    expert. Such remuneration was hitherto treated as ‘deferred revenue expenditure’ and was being amortized
                    over a period of twenty-four months.



                                                                                                                           85
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




     With a view to achieving early compliance with Accounting Standard – 26 (“AS–26”) issued by The Institute
     of Chartered Accountants of India on Intangible Assets, as recommended in that standard, the Company
     has decided to charge off the entire amount on account of the above remuneration to revenue, as and when
     it is incurred. In terms of AS – 26, the balance of Rs.124.88 million at the beginning of the year has been
     adjusted out of the opening balance of the profit and Loss account, after adjusting Rs.45.90 million towards
     deferred tax credit out of the said amount. The expenditure aggregating to Rs.235.12 million incurred during
     the year has been charged to the Profit and Loss Account.

     Had the Company not opted for early adoption of the standard:
     a. the charge to Profit and Loss Account pertaining to the opening deferred revenue expenditure would
     have been Rs.78.98 million (net of tax of Rs.45.90 million).
     b. Out of the total amount spent during the year, Rs.100.04 million (net of tax of Rs.58.12 million) would
     have been deferred.

     The aggregate effect of (a) & (b) above:
     a. the current year’s “Profit After Extra-Ordinary Items” would have been higher by Rs.21.05 million (net
        of tax of Rs.12.23 million), an
     b. the “Disposable Profit” would have been higher by Rs.100.04 million (net of tax of Rs.58.12 million).

2.16 a. The Company has during the year, acquired the business of M/s. Tricolor Infotech International Inc,
        (T3i), Mauritius effective January 1, 2003. The following assets and liabilities were acquired / assumed
        at their book values as appearing in T3I’s books as at December 31, 2002:


       Fixed Assets                                                                               4.97
       Current Assets, Loans and Advances                                                        33.72
       Current Liabilities & Provisions                                                           4.15

       The amount payable to T3i as at March 13, 2003 of Rs.34.54 million is included in Sundry Creditors.

     b. As a result of the above, the excess of purchase price over the net assets acquired has been recognized
        as Business & Commercial Rights-Rs.75.38 million and Goodwill Rs.17.91 million.

2.17 The Company has entered into a 50:50 Joint Venture, (”JV”), Semantik Solutions GmbH with M/s INNOVA
     Business Development and Holding GmbH, Germany.

     As per terms of agreement the capital commitments of the Company in respect of the venture towards term
     loan and working capital loan is Rs. 66.01million

     Based on unaudited accounts of the JV, the 50% share of assets & liabilities related to the Company’s
     interests as at March 31, 2003 is:


     Capital Work in Progress                                                                    18.41
     Current Assets                                                                               7.09
     Current Liabilities                                                                         20.27
     Unsecured Loan                                                                               5.24
     Miscellaneous Expenditure                                                                    0.52

     The Profit & Loss account of the JV for the year ended March 31, 2003 is not drawn as it is in the first
     year of operation and commercial operations are yet to commence.



86
     2.18 Disclosure in respect of Related Parties :
     1. Related party relationship as identified by the management and relied upon by the auditors.
     2 a. Subsidiaries (controlling parties): ICICI Infotech Inc., ICICI Infotech Pte Limited, ICICI Infotech Pty Limited, Tricolor Infotech International Inc., ICICI Infotech
            SDN BHD, Command International Holdings LLC.
         b. Associates (with whom transactions have been entered into): ICICI Bank Limited (includes erstwhile ICICI Limited, ICICI Capital Services Limited,
            ICICI Personal Financial Services Limited), ICICI Venture Funds Management Company Limited, ICICI Securities and Finance Company Limited, ICICI
            Home Finance Company Limited, ICICI Lombard General Insurance Company Limited, ICICI Prudential Life Insurance Company Limited, Prudential
            ICICI Asset Management Company Limited and Semantik Solutions GmbH.
         c. Directors / Key Management Personnel: Mr.V Srinivasan (Managing Director & Chief Executive Officer) and Mr.Manoj Kunkalienkar (Executive Director).
         d. Relative of Key Management Personnel: Mrs. Sudha Kunkalienkar (wife of Mr.Manoj Kunkalienkar).
     3. * ICICI Infotech Inc. (a subsidiary company), repaid Rs.48.78 million during the year. Maximum balance for the year ended March 31, 2003 - Rs. 48.80 million
         (for the year ended March 31, 2002 - Rs. 34.07 million).
     4. 'Loans to Others (including employees)' includes loans granted to Managing Director & Chief Executive Officer - Rs.1.88 million (as at March 31, 2002 - Rs.1.99
         million); maximum balance - 1.99 million (for the period ended March 31, 2002 - Rs. 2.00 million)
     5. 'Loans to Others (including employees)' includes loans granted to Executive Director - Rs.1.18 million ( as at March 31, 2002 - Nil); maximum balance - Rs.1.18
         million ( for the year ended March 31, 2002 - Nil)
                                                                                                                                                                                                                               ICICI Infotech Limited




                                                                                                                                                (Rupees in million)
                                                                                                              Associates           Directors, Key Management
      Particulars                                Subsidiaries           Associates (ICICI Bank Ltd)   (other than ICICI Bank Ltd)  Personnel and their relatives
                                        For year ended For year ended For year ended For year ended For year ended For year ended For year ended For year ended
                                        March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002

      Income                                  23.62           13.65         1,032.95        1,127.41           114.37           89.46                -                -
      Interest income                          1.71               -              0.63               -            0.81                -                -               -
                                                                                                                                                                                  (Formerly ICICI Infotech Services Limited)




      Expenses                                20.42          250.81           178.54          192.31              9.20           0.76                -                -
      Bad Debts written off                    2.96                -            1.62                -           13.53            0.17                -                -
      Preference dividend paid                    -               -          131.22                -                 -              -                -                -
      Equity dividend proposed / paid             -               -             4.57          157.65             9.76               -                -                -
      Remuneration / fees                         -                -                -               -                -              -            4.27             3.27
      During the year:
      Loans granted *                         14.71          161.93                 -              -                 -               -            2.95            2.00
      Loans availed                               -                -           42.50        1,400.54                 -         150.00             2.24               -
      Investment made                         98.22               -                -                -            0.61               -                -               -
      Advances given                           6.58               -            22.16               -            11.37               -             0.06               -

                                            As at          As at      For year ended For year ended     As at          As at          As at          As at
                                        March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002
      Loans availed                                -               -        136.77         100.16               -          1.34              -               -
      Sale of assets                               -               -         (1.13)          5.75               -              -             -               -
      Investments                            859.04         760.82                -              -              -              -             -               -
      Loans granted *                              -          34.07               -              -              -              -         4.12            1.94
      Share appln. Money                      17.02         126.63                -              -              -              -             -               -
      Other Advances                           6.58                -         16.17               -         15.40               -         0.06                -
      Sundry Debtors                           4.39           74.85         128.93         198.05          27.98          22.62              -               -
      Sundry Creditors                       167.81         295.74             0.94         10.22           0.36               -                             -




87
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




2.19
                                                                          For the              For the
                                                                        year ended           year ended
                                                                       March 31, 2003       March 31, 2002
       a.   CIF value of import of
            Capital goods                                                      61.75              24.77
            Inventory                                                           7.61                   -
       b.   Expenditure in foreign
            Currency in respect of :
            - Market development and
              Support expense                                                 235.12             218.54
            - job and consultancy charges                                     129.59              31.74
            - travelling and other expenses                                    12.65              67.28
            - Dubai branch expenses                                           172.86              45.76
               (Including Professional and Consultancy
               charges Rs 35.38 million; for the year
               ended March 31, 2002 Rs 3.73 Million)
            - London branch expenses                                           44.37               19.94
       c.   Dividend remitted in Foreign currency
            (one Non-resident share- holder)
            Number of shares                                                        -        3,840,000
            Dividend for the year                                                   -       2000 – 2001
            Amount remitted                                                         -              2.31
            Dividend for the year                                                   -       2001 – 2002
            Amount remitted                                                         -             10.56
       d.   Earnings in foreign currency
            (i) Income from Software development
                  services and sale of products                               605.85              199.79
            (ii) Interest Income                                                1.83                0.84

2.20 Quantitative Details:
     The Company's operations comprise of Business Process Outsourcing Services; Software Development
     Services and Products and IT Infrastructure, Networking & Facilities Management. The production and sale
     of software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details
     of sales and certain information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the
     Companies Act, 1956.

2.21.Consequent to acquisition of Branches at Dubai, Chennai and Bangalore in the previous year and
     predetermination of a long term contract (Refer Note No.2.14 above) during the year, acquisition of business
     of Tricolor Infotech International Inc., current year’s figures are not comparable with those of previous year.
     Figures for the previous year have been re-grouped / re-arranged, wherever considered necessary to conform
     to current year's presentation.




88
 ICICI Infotech Limited
 (Formerly ICICI Infotech Services Limited)




Rupees in million part of the Accounts
 Schedules forming
                                                                                      Rupees in million
                                                                      For the year      For the year
                                                                         ended             ended
 XVI Cash Flow Statement                                             March 31, 2003    March 31, 2002

 A   Cash flow from Operating Activities :
     Profit before taxation and exceptional items                         55.06              332.98
     Adjustments for:
     Depreciation / Amortisation                                        171.05               121.13
     Foreign Exchange                                                      4.64               (2.46)
     Loss / (Profit) on sale of fixed assets                               0.42                3.46
     Marketing Development & Support expenses amortised                 235.12                93.66
     Miscellaneous Expenditure written off                                 1.33                0.47
     Loss/ (Profit) on disposal of investment (net)                      (0.40)                1.86
     Dividend Income                                                     (0.51)               (3.27)
     Interest received                                                   (7.73)               (3.07)
     Interest Paid                                                       38.55               126.80
     Provision for doubtful debts                                        10.94                     -
     Bad debts written off                                               22.17                 3.26
     Operating Profit before Working Capital Changes                    530.64               674.82
     Adjustments for:
     Trade and Other Receivables                                       (187.24)             (296.41)
     Inventories                                                         (4.52)                    -
     Trade Payables and Other Liabilities                               (83.43)              347.06
     Marketing Development & Support Expenses                          (235.12)             (218.54)
                                                                       (510.31)             (167.89)

     Cash generated from Operations                                       20.33              506.93
     Income Taxes paid                                                  (21.36)              (86.67)

     Net cash from Operating Activities - A                              (1.03)              420.26

 B   Cash flow from Investing Activities :
     Purchase of fixed assets (Including Capital-Work-in-Progress)     (431.80)             (408.10)
     Sale of fixed assets                                                 70.15                6.71
     Purchase of Investments/ application money                            9.76             (186.57)
     Sale of Investments/ Refund of Equity                                66.06               17.95
     Dividend received                                                     0.51                3.27
     Loans (given) / received back                                        15.73              176.77
     Interest received                                                     7.73                3.07

     Net cash from Investing Activities - B                            (261.86)             (386.90)

                                                                                            ...Cont’d




                                                                                                        89
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Schedules forming part of the Accounts
                                                                                                      Rupees in million
                                                                                    For the year        For the year
                                                                                       ended              ended
XVI Cash Flow Statement (Cont’d...)                                                March 31, 2003      March 31, 2002

C    Cash flow from Financing Activities :
     Issuance of the Equity Share Capital                                                77.42              1,150.38
     Issuance of the Preferance Share Capital                                           200.00              1,300.00
     Premium on Redemption of Preference Share Capital                                (202.10)                     -
     Dividends paid                                                                   (146.63)               (168.23)
     Share Issue Expenses                                                                     -               (10.61)
     Tax on distributed profits                                                          (1.97)               (17.16)
     Interest paid                                                                     (38.55)               (126.80)
     Proceeds from borrowings ( net )                                                   373.39             (2,157.77)

     Net Cash used in Financing Activities - C                                          261.56                (30.19)

     Net Increase in Cash and Cash Equivalents (A+B+C)                                   (1.32)                 3.17

     Cash and Cash Equivalents as at beginning                                           33.91                 30.74

     Cash and Cash Equivalents as at end                                                 32.59                 33.91

Notes :
1. The above Cash Flow Statement has been prepared under the 'Indirect Method' as set out in Accounting
    Standard-3 on " Cash Flow Statements " issued by the Institute of Chartered Accountants of India.

2.   Cash and Cash equivalents exclude balance in margin money of Rs. 7.82 million (as at Mar 31, 2002 - Rs. 2.13 million).

3.   Previous year's / period's figures have been regrouped / rearranged wherever necessary to conform to this year's
     classification.


Signatures to Schedules “I” to “XVI”
For and on behalf of the Board

V. Srinivasan                                                                    Vijay Thacker
Managing Director & CEO                                                          Director, Chairman Audit Committee

Amar Chintopanth                                                                 S.R. Shettigar
Chief Financial Officer                                                          Company Secretary

Mumbai: April 17, 2003




90
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I.   Registration Details :
     Registration No : 74411                                  State Code :11
     Balance sheet Date : March 31, 2003

II. Capital raised during the year (Amount in Rs. millions)
    Public Issue                                              Rights Issue
    Nil                                                       Nil
    Bonus Issue                                               Private Placement
    Nil                                                       277.42

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. millions)
     Total Liabilities                                      Total Assets
      2,563.96                                              2,563.96
     Source of Funds:
     Paid-up Capital                                        Reserve and Surplus
     1,809.78                                               279.28
     Secured Loans                                          Unsecured Loans
      238.08                                                236.82

     Appllication of funds:
     Net Fixed Assets                                         Investments
     1, 300.29                                                860.67

     Net Current Assets                                       Miscellaneous Expenditure
     425.61                                                   11.9 8

     Accumulated Losses                                       Deferred Tax Liabilities
     Nil                                                      3 4 .59

IV. Performance of Company (Amount in Rs. millions)
    Turnover                                                  Total Expenditure
    1,793.67                                                  1,523.79

     Profit Before Tax                                        Profit After Tax
     55.06                                                    125.67

     Earning per Share in Rs.                                 Dividend
     -0.09                                                    5%

V. Generic Name of Principal Product/Service of the Company (as per monetary terms)
Item Code No.: Not applicable

Service Description: Business Process Outsourcing Services, Software Development Services & Products, IT Infra
Networking & Facilities Management

V. Srinivasan                                                                     Vijay Thacker
Managing Director & CEO                                                           Director, Chairman Audit Committee

Amar Chintopanth                                                                  S.R. Shettigar
Chief Financial Officer                                                           Company Secretary

Mumbai:
Date: April 17, 2003


                                                                                                                  91
92
     ICICI INFOTECH LIMITED
     Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies
     Sr.      Name of Subsidiary Company         Financial year     Number of           Extent of         Net aggregate amount of                Net aggregate amounts of
     No.                                         of subsidiary    equity shares        interest of          profits or losses of the          profits /losses of the subsidiary
                                                   ended on       held by ICICI      ICICI Infotech    subsidiary so far as it concerns           so far as it concerns the
                                                                   Infotech Ltd      Limited in the     the members of ICICI Infotech            members of ICICI Infotech
                                                                    and / or its        capital of         Limited and is not dealt            Limited dealt with or provided
                                                                  subsidiaries       the subsidiary      with in the accounts of ICICI           for in the accounts of ICICI
                                                                                                               Infotech Limited                         Infotech Limited
                                                                                                          For the             For the            For the              For the
                                                                                                       financial year      financial year    financial year        financial year
                                                                                                         ended on            ended on           ended on             ended on
                                                                                                      March 31, 2003 March 31, 2002         March 31, 2003 March 31, 2002
     1       ICICI Infotech Inc.                March 31, 2003    42,275,000            100%             US $ (-0.3)        US $ (28.4)              --                  --
                                                                  shares of                               Million             Million                --                  --
                                                                  US $ 0.30/-
                                                                                                                                                                                                                                 ICICI Infotech Limited




                                                                  each1,000,000
                                                                  shares of US
                                                                  $ 0.01 each

     2       ICICI Infotech Pte. Ltd.           March 31, 2003    1,690,000             100%              S $ 0.1            S $ 0.4               --                  --
                                                                  Ordinary                                Million            Million               --                  --
                                                                  shares of
                                                                  S $ 1/- each
                                                                                                                                                                                    (Formerly ICICI Infotech Services Limited)




     3       ICICI Infotech SDN BHD             March 31, 2003    250,000 Ordinary      100%             RM 0.40               --                  --                  --
                                                                  shares of                               Million
                                                                  RM 1 each

     4       ICICI Infotech Pty Ltd.            March 31, 2003    584,731 Equity        100%             AUD (1.2)             --                  --                  --
                                                                  shares of AUD                           Million
                                                                  1/- each

     5       Tricolour Infotech International   March 31, 2003    800,000               100%            US $ 0.003          US $ .01               --                  --
             Inc.-Under winding up                                Equity sharesof                        Million            Million
                                                                  US $ 1/- each


     For and on behalf of the Board

     V. Srinivasan                                                                             Vijay Thacker
     Managing Director & CEO                                                                   Director, Chairman Audit Committee

     Amar Chintopanth                                                                          S.R. Shettigar
     Chief Financial Officer                                                                   Company Secretary

     Mumbai:
     Date: April 17, 2003
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




                             ICICI INFOTECH LIMITED AND SUBSIDIARIES


                             CONSOLIDATED FINANCIAL STATEMENTS


                             AS OF MARCH 31 2002 - 2003


                             PREPARED IN ACCORDANCE WITH


                             UNITED STATES GENERALLY ACCEPTED
                             ACCOUNTING PRINCIPLES (US GAAP)




                                                                 93
                                 ICICI Infotech Limited
                            (Formerly ICICI Infotech Services Limited)

     MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL CONDITIONS
     AND RESULTS OF OPERATIONS

     GLOBAL ECONOMIC OVERVIEW AND GLOBAL IT INDUSTRY OVERVIEW
     The global economy was entangled in another year of slackened growth with output
     showing a marginal increase to 3 % in 2002 from 2.3% in 2001. By comparison, Indian
     economy grew at 5.57% in 2002-2003, although below the target of 6.3%. Globally, growth
     rates have weakened across industries and this coupled with the continued geo-political
     uncertainty in various parts of the world have had a negative impact on the IT industry.
     The major IT spenders are cutting down their IT spend to business critical systems,
     wherein there is a tangible return on their IT investment. Besides the appetite for new
     technology initiatives have dried up significantly.

     The IT industry has during the last three years undergone significant transformation, with
     the polarization of business taking place towards the big IT consulting and systems
     integration companies, as the clients are increasingly willing to only interface with fewer
     IT vendors. Hence, the big IT companies are able to attract large IT projects, whereas the
     mid-size and smaller IT firms are increasingly facing growth pressures. These challenging
     times have been compounded with significant pricing pressure on both offshore and
     onsite rates.

     SIGNIFICANT EVENTS OF THE YEAR
     During the financial year 2002-2003, the Company undertook the process of consolidation
     and integration of the different acquisitions made in the previous years, simultaneously
     pursuing its business growth plans. The major events of the year are as under:

     • Successful positioning of the Company as an IT solutions company with a wide range
       of products and service offerings.

     • Acquisition of Intellectual Property Rights (IPR) of CrossRoads, an Enterprise Relationship
       Management Solution

     • Acquisition of Intellectual Property Rights (IPR) of Triton, a web based customer
       acquisition and channel partner management solution

     • Setting up of a wholly owned subsidiary in Australia to cater to the Australian and New
       Zealand IT markets

     • Acquisition of 50 % stake in the joint venture (JV) company, Tricolour Infotech
       International Inc, Mauritius from Emirates Bank Group. The JV was undertaking
       operations in the Middle East and African region and it has subsequently been merged
       with the Dubai Branch. With this acquisition, the Middle East and African operations
       are carried on as branch operations of ICICI Infotech.

     • Setting up of a wholly owned subsidiary in Malaysia with Multi-media Super Corridor
       (MSC) status by ICICI Infotech Pte Ltd, the wholly owned subsidiary of ICICI Infotech.




94
                          ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

• The agreement with Fraunhofer Institute, Germany fructified into formation of a 50 :
  50 joint venture company, Semantik Solutions GmbH, Germany to service the European
  and German IT markets

• Replacement of 9.85 % cumulative redeemable preference share capital worth Rs.
  1300 million with 6.35 % cumulative redeemable preference share capital worth Rs.
  1500 million.

RESULTS OF OPERATIONS
An overview of the Company’s performance over last four years is summarized below:

Particulars                              FY 2003     FY 2002       FY2001      FY2000
Revenues                                   2,307       2,616         1,633        417
Less: Cost of Revenue                      1,581       1,713           693        166
Gross Profit                                 726         903           940        251
Less: General, Operating &
Administration Expenses                       399         381           467        80
EBITDA                                        328         522           473       171
Less: Interest                                 40         131            72         5
Less: Depreciation & Amortization             102          65            42        10
Less: Share of Loss in Affiliate            (0.28)      (0.39)           (2)        -
Add: Other Income                              18          16            28         4
Earnings before Amortization & Tax            204         342           385       160
Less: Amortization                               -           -           81         -
Profit Before Tax                             204         342           304       160
Less: Taxes / (Refund)                       (117)         91           144        63
Profit After Tax                              321         251           160        97
Extraordinary Write-offs
Goodwill write-off                              -        1,250             -         -
New Business Initiatives written off          235          218
Adjusted Net Income                            86      (1,217)          160        97


Revenues
The Company derived its revenue primarily from sale of various IT products and solutions,
Software Development and Consultancy services, IT Infrastructure, Networking and
Facilities management services and certain part from Business Process Outsourcing
services. In FY 2003, revenues were Rs.2307 million, a decline of 12 % over previous
year’s revenues of Rs. 2560 million. The decline revenue in FY 2003, is attributed to the
shift in the business paradigm, from a BPO and IT services company to that of an IT
Products and Solutions company. The Business Process Outsourcing (BPO) division was
servicing the Retails Assets Division of ICICI Bank. During the year, ICICI Bank decided
to in source the operations servicing their Retail Assets Division. Hence, that contract
was pre-terminated by ICICI Bank, which has resulted in decline in the BPO revenues.
The total turnover of the Company has increased at a Compounded Annual Growth Rate
(CAGR) of 77 % from FY 2000 to FY 2003.




                                                                   95
                                         ICICI Infotech Limited
                                   (Formerly ICICI Infotech Services Limited)


                                                Revenue Growth
                        3000
                                                                 2616
                                     2307
                        2500
        Rs in million



                        2000
                                                                                                 1633
                        1500

                        1000

                        500

                          0
                                    FY 2003                     FY 2002                      FY 2001
                                                                 Year

     Revenue Mix
     The Company has three business divisions, namely, Software Development & Consultancy
     Services, Software Products and Solutions, IT Infrastructure & Facilities Management
     Services and Business Process Outsourcing Services.

     Software Development & Consultancy Services and Product Solutions contributed Rs.
     1264 million in the FY 2003, a 22 % decrease over previous year’s revenues of Rs. 1626
     million. The decline is due to continuous pressure on onsite and offshore billing rates
     coupled with reduction in business volumes. Of this, revenue from sale of Software
     Products and Solutions clocked was Rs. 295 million in the current year as against Rs.
     147 million in the previous year, thus registering growth of more than 101 % over the
     previous year. The contribution of the software products in the total revenues has increased
     from 6 % in FY 2002 to 13 % in FY 2003.

     IT Infrastructure and Facilities Management Services added Rs. 339 million to the Company's
     revenues in the current year as against Rs. 272 million in the previous year representing
     a top line growth of 25 %. Revenues from IT Infrastructure and Facilities Management
     Services as percentage of total revenues has increased from 10 % in the previous year
     to 15 % in the current year.

                                              Revenue Mix - FY 2003
                                31%


                                                                                        54%


                                   15%

                               Software Development & Consultancy Services & Product Solutions
                               IT Infra Networking and Facilities Management
                               Business Processing Outsourcing Services




96
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)




                India & South Asia                    Middle East & Africa
                Europe                                North America
                Far East Asia

The revenue mix from the geographies is also broad based with India & other South Asian
countries contributing about 49 % of the revenues, North America 33 % and Middle East
Asia and Africa about 13 %. We have inroads into the European and Far East Asian regions
and they contribute 3 % and 2 % respectively to the revenue pie.

ICICI Infotech has been shifting its focus from the BPO services towards value added
high-end software products and related services. In this endeavour, ICICI Infotech has
put together a suite of Banking Products – Vertical B, Enterprise Insurance Solution –
Premia, Enterprise Resource Planning (ERP) products – Orion, Excalibur and Merlin,
Enterprise Relationship Management Solution (ERM) – Crossroads and Customer Acquisition
Suite – Triton. The percentage of revenues from Software Products & Related Services
has been increasing steadily, while percentage of revenues from BPO service is declining.
Thus, the business mix of the Company has become more broad-based with depth in
each one of the business lines.

Cost of Revenues
Cost of revenues represents the direct cost for each of the business segments, the major
components being payments & provisions for employees, staff welfare expenses and
outsourcing expenses. Cost of revenues as a % of revenues increased to 69 % in FY
2003 as compared with 65 % in FY 2002. The Company in anticipation of the exponential
growth in the software products group has put in place an implementation pool, which
has had an impact on the cost of revenues. The Company had also introduced an employee
Early Separation Scheme (ESS) during the year resulting in additional charge of Rs. 15
million. The increase in cost of revenues as a percentage of revenues is also due to clients
aggressively negotiating and reducing prices.

Selling, General and Administrative (SGA) Expenses
Selling, General and Administrative Expenses primarily consists of employee costs of the
sales, marketing and other support service personnel, advertisement, brand building, bad
debts, provision for doubtful debts, repairs and maintenance, rent, communication costs,
travelling expenses, legal and professional expenses, office expenses and other
miscellaneous expenses.




                                                                     97
                                 ICICI Infotech Limited
                            (Formerly ICICI Infotech Services Limited)

     The selling, general and administrative expenses have increased as a percentage of sales
     from 15 % to 17 %. In absolute terms, SGA expenses increased to Rs. 399 million in FY
     2003 representing an increase of 5 % over the expenses of Rs. 381 million in FY 2002.
     The increase is on account of launch of the ERP & ERM products in the various geographies
     and enhanced marketing and brand building expenses incurred during year. The Company
     has during the year taken cost cutting initiatives on various fronts.

     Earnings before Interest, Tax, Depreciation and Amortization (Operating Profit or EBITDA)
     EBITDA is defined as operating profit before interest, depreciation, amortization of goodwill,
     amortization of deferred stock compensation and taxes. EBITDA is a widely accepted
     valuation indicator for companies in Information Technology industry. EBITDA should not
     be considered in isolation or a substitute for measures for financial performance or
     liquidity. EBITDA may not be comparable to calculations of similarly titled measures
     presented by other companies.

     The Company earned an operating profit (profit before interest, depreciation, amortization,
     tax and other income) of Rs. 204 million in FY 2003 against Rs. 342 million in FY 2002,
     representing operating margins of 14% during the current year as compared 20% for the
     previous year.

     This reduction in operating margins is due to increase in the cost of revenues by 4 % and
     increase in the SGA expenses by 2 %. The reduction in the operating margins is due to
     the increase in sales and marketing expenses and in the development of software products.

     Interest, depreciation and amortization
     The interest cost has decreased from Rs. 131 million to Rs 40 million during the year. The
     reduction in the interest costs is due to the conversion of interest bearing debt from
     erstwhile ICICI Limited to preference shares during the last quarter of the previous year
     and the replacement of high cost debt with the low cost debt.

     The Company has provided Rs. 102 million towards depreciation for FY 2003 as against
     Rs. 65 million in FY 2002 representing 4 % and 2 % respectively of total revenues. The
     spurt is due to expansion of the offshore development centers as well as amortization
     of the software products acquired and internally developed. The Company has incurred
     during the year Rs. 235 million towards new business development initiatives towards
                                                    ,
     building the product brands globally in the ERP ERM and BFSI vertical. The management
     is of the opinion that these strategic marketing initiatives will yield results over the next
     two years.

     Provision for Taxes
     The Indian corporate tax rate for FY 2003 was 36.75% (comprising a base rate of 35%
     and a surcharge of 5% on the base rate) as against 35.7% for FY 2002 (comprising a base
     rate of 35% and a surcharge of 2% on the base rate). Export profits from India are entitled
     to benefit under two schemes of the Government of India. Under the first scheme (Section
     80 HHE of the Income-tax Act), certain percentage of the proportion of the profits of the
     Company attributable to export activities is deductible from the income subject to tax.
     Under the second scheme (Section 10A of the Income Tax Act), the profits derived from




98
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

the export of software, etc. out of operation carried out in a Software/Hardware Technology
Park, Free Trade Zone, Special Economic Zone is entitled to a total (90% in the year 2002-
03) tax holiday for ten years effective 1999-2000. The Company's Offshore Development
Center at Vashi, Bangalore and Chennai are covered under the second scheme.

The Company has opted for the Section10 A benefits in the current year for the profits
arising out of its businesses in the STP unit, which has resulted in write back of Rs.96
million towards deferred taxes.

LIQUIDTY AND CAPITAL RESOURCES
The cash and cash equivalents as on March 31, 2003 were Rs. 118 million as against Rs.
99 million on March 31, 2002. Cash and cash equivalents include cash, deposits with
banks and liquid investments due on demand or maturing within three months. On March
31, 2003 the current assets including marketable securities aggregated to Rs. 1040 million
as against Rs. 832 million on March 31, 2002. The current ratio as on March 31, 2003 was
1.39 as against 1.82 as on March 31, 2002. The decrease is due to large portion of the
debt being payable within 3 months from March 31, 2002 and is factored in as part of
current liabilities. Growth of the Company has been financed by a prudent mix of equity
capital, preference capital, short to medium term debt and cash generated from operations.
During the year, 260,000,000 9.85% Cumulative Preference Shares of Rs.5 each totaling
Rs. 1300 million was prematurely redeemed at a premium of Rs.202.10 million and
replaced with 300,000,000 6.35% Cumulative Preference Shares of Rs. 5 each, totaling
Rs.1500 million and maturing on March 31, 2012, reflecting the lower interest rate scenario
prevailing in the market.

RISK DISCLOSURES

Risks related to international operations
The impact of the slowdown in the global economy has resulted in reduced IT spend as
well as postponement of the decisions and extension of sales cycles by various customers.
However, this has and is expected to continue to force them to scout for tangible return
on the IT investments. The Company understands the need to be present across
geographies to mitigate the risks arising out of concentration of clients in any particular
geography as well as to comfort the existing & prospective clients about its ability to
deliver the services irrespective of turmoil/ disturbance prevalent in any particular
geographical region and therefore has significant operations spread across three continents
viz., Asia, North America and Europe. The Company has also diversified well into software
products business in order to be able to provide ready to use solutions to its clients.

Internal Procedures & Control
The Company has put in place the procedures and controls that are intended to ensure
the integrity and accuracy of the information reported as well as to safeguard the interests
of the Company. This involves well-defined process flows (including authorizations) for
revenue and capital purchases, other expenses, monitoring of inventory of resources &
assets of the Company, plugging of revenue leakage, etc. The Company also has a
quarterly internal audit done by an independent team to evaluate and ensure




                                                                       99
                                  ICICI Infotech Limited
                             (Formerly ICICI Infotech Services Limited)

      1.   Adherence to systems and procedures
      2.   Adequacy of controls
      3.   Accuracy of information
      4.   Utilisation of assets of the Company

      The Company has constituted an audit committee in line with the provisions of the
      Companies Act, 1956, which evaluates the report of the internal audit team and the
      audited financial statements of the Company.

      Management of Growth
      The Company has experienced significant growth in recent periods. The Company's
      upward growth trajectory is expected to place demands on its management and other
      resources and will require continuous development and improvement of its operational,
      financial and other internal controls. The Company has planned significant growth over
      the next three years; the immediate challenges being recruiting, retaining personnel and
      maintaining high quality standards and preserving the Company's values and culture.
      Management of its growth and assimilation of new employees will be a crucial factor
      determining the quality of the Company's services and products, its ability to attract clients
      as well as skilled personnel, its business prospects, its results of operations and financial
      condition.

      Potential fluctuations in future operating results
      The Company's operating results may fluctuate depending on number of factors like size,
      timing and profitability of projects, accuracy of estimates made, change in the law,
      incentives provided by Government, exchange rate fluctuations besides a significant
      percentage of operating expenses being fixed cost not directly related to revenue
      generation. The uncertainty gets accentuated in light of the Company’s focus on software
      products, which entail revenues that are non-uniform in nature, with the milestones spread
      over more than one accounting period. Further revenues from software products involve
      sales cycles that are long drawn and can be as long as 18 months in BFSI vertical.

      Client concentration
      The Company is the preferred software solutions provider to ICICI Bank group. Presently,
      significant part of the revenues of the Company is derived from ICICI Bank group. Going
      forward, the Company has undertaken measures to broad base its clientele outside of
      the ICICI Bank Group. Hence, ICICI Bank group’s share in the Company's revenue is
      expected to come down in the years ahead.

      Fixed-Price, Fixed -Time Frame Contracts
      The Company offers a part of services on fixed-price, fixed-time contracts basis. The
      Company realized significant software services revenues from fixed-price projects during
      the year ended March 31, 2003 and the percentage may increase in the coming years.
      In view of the above accurate estimation of the resources and time required for a project,
      future rates of wage inflation, currency exchange rates and the scope of engagement will
      be crucial to the Company’s business and financial condition.




100
                           ICICI Infotech Limited
                      (Formerly ICICI Infotech Services Limited)

Infrastructure & potential disruption in telecommunications
The Company's business model is based on offshore software development concept,
which provides the Company with cost advantages and ability to provide 24x7 service
to its clients. Any potential disruption in telecommunication channels would adversely
affect the Company's operations

Risks associated with possible acquisitions
The Company has made acquisitions of Intellectual Property Rights during the year, thus
adopting aggressive acquisitive growth strategy. The integration process of these new
divisions and resources might place significant demands on the management and divert
the managerial time, which may affect the business of the Company.

Competition
The market for IT services is rapidly evolving and highly competitive. Future competition
may come from firms within India, Multi National Companies (MNC’s) setting up subsidiaries
in India and as well as from cost competitive economies like Eastern Europe and China
especially for low-end services. The Company’s market share may be affected by the
aforementioned factors. The new entrants and existing competitors could offer or introduce
new technologies or could treat the services to be provided by one of our businesses as
a component of a larger service offerings. In IT products, the Company faces competition
from large product players. Some of the competitors have substantially greater financial,
technical, marketing and other resources and have also made significant investments in
new offshore facilities. The inability of the Company to cross sell services, attract and
retain new customers could harm the Company’s business.

Dependence on skilled personnel & risks of wage inflation
The Company's ability to execute complex project assignments and to obtain new clients
is largely dependent on its ability to attract, train, motivate and retain highly skilled IT
professionals. Inability to attract and retain the human assets will adversely impair the
ability of the Company to expand its business. There is also significant competition for
IT professionals with the requisite skills and talent. The Company’s ability to attract and
retain the human assets will be the test for the effective expansion of its operations.

REPORT OF THE MANAGEMENT
The financial statements of ICICI Infotech Ltd. have been prepared in compliance with
the requirements of accounting principles generally accepted in the US (US GAAP). The
management of the Company accepts responsibility for the integrity and objectivity of
these financial statements, as well as various estimates and judgements used therein.
In addition to historical information contained therein, the above discussion may include
forward looking statements which involve risks and uncertainties, including but not limited
to, risks inherent in the Company's growth strategy, dependence on availability of qualified
technical consultants and other factors discussed in this report.




                                                                     101
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Report of Independent Auditors
To the Board Of Directors of

ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)

We have audited the accompanying consolidated balance sheets of ICICI Infotech Limited (formerly ICICI Infotech
Services Limited) and subsidiaries as at March 31, 2003 and 2002, and related consolidated statements of
operations, stockholder's equity, and cash flows for the years then ended. These financial statements are
responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of ICICI Infotech Limited and subsidiaries as at March 31, 2003 and 2002, and the
consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States.




Ernst & Young
Mumbai, India

May 27, 2003




102
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




AS AT MARCH 31, 2003
(Expressed in INR, except share data or as otherwise stated)

Consolidated Balance Sheets
                                                                                   As at,
                                                                 USD                INR             INR
                                                               31-Mar-03         31-Mar-03       31-Mar-02
                                                               See Note 2.2


ASSETS
Current Assets:
Cash and cash equivalents                                       2,492,541       118,370,759     99,044,297
Marketable securities, available for sale                               -                 -     65,971,032
Accounts receivable, net                                        9,370,579       445,008,799    154,950,022
Accounts receivable from related parties                        4,376,816       207,854,997    320,085,148
Other advances                                                  2,783,378       132,182,625    104,538,745
Prepaid income taxes                                            2,243,595       106,548,302     54,454,582
Deferred tax asset, net                                            27,684         1,314,669              -
Prepaid expenses                                                  638,282        30,312,027     33,075,632
                                                               21,932,875     1,041,592,178    832,119,458

Deposits and other advances                                     1,852,347        87,967,981     112,402,367
Investments                                                        21,549         1,023,358               -
Goodwill, net                                                  12,210,980       579,899,442     564,125,189
Marketing rights, net                                           1,535,615        72,926,353               -
Property and equipment, net                                    15,452,125       733,821,431     742,464,970
Capitalised Software, net                                       7,417,755       352,269,166     215,156,731
Investments in an affiliate                                         4,275           203,040      17,689,011
                                                               60,427,521     2,869,702,949   2,483,957,726

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                                                5,145,473      244,358,499     180,542,439
Accounts payable to related parties                                76,171        3,617,338               -
Accrued payroll                                                 2,250,690      106,885,282     124,440,946
Accrued expenses                                                1,658,568       78,765,401      56,619,741
Deferred tax liability, net                                             -                -      94,012,188
Debt, current portion                                           7,325,965      347,910,072       2,573,492
                                                               16,456,867      781,536,592     458,188,806

                                                                                                   …Cont’d




                                                                                                        103
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




AS AT MARCH 31, 2003
(Expressed in INR, except share data or as otherwise stated)

Consolidated Balance Sheets (Cont’d…)
                                                                                  As at,
                                                                 USD               INR             INR
                                                               31-Mar-03        31-Mar-03       31-Mar-02


Debt, excluding current portion                                 2,737,327     129,995,673      98,929,322

9.85% Redeemable Preference Shares
(Authorized 300,000,000 shares of INR 5 par)                             -               -   1,300,000,000
Issued and outstanding 260,000,000 shares, Redeemable at par

6.35% Redeemable Preference Shares
(Authorized 300,000,000 shares of INR 5 par)                   31,585,597    1,500,000,000               -
Issued and outstanding 300,000,000 shares
(Previous year Nil), Redeemable at par

Stockholders' Equity:
Common stock (Authorized 100,000,000 shares of INR 5 par)
Issued and outstanding 61,955,622
(Previous year 61,176,887)                                      6,523,018      309,778,110     305,884,435
Additional paid-in-capital                                      6,602,243      313,540,525     240,012,150
Retained earnings                                              (5,250,859)   (249,363,314)      (5,567,704)
Accumulated other comprehensive Income                          1,773,328       84,215,363      86,510,717
                                                                9,647,730      458,170,684     626,839,598
                                                               60,427,521    2,869,702,949   2,483,957,726


See accompanying notes to consolidated financial statements




104
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




FOR THE YEAR ENDED MARCH 31, 2003
(Expressed in INR, except share data or as otherwise stated)

Consolidated Statements of Operations
                                                                              Year Ended,
                                                                 USD              INR              INR
                                                               31-Mar-03       31-Mar-03        31-Mar-02


Revenue                                                        48,577,686    2,306,954,286    2,616,234,644
Cost of revenue                                                33,280,890    1,580,509,450    1,712,812,994
Gross Income                                                   15,296,796      726,444,836      903,421,650

OPERATING EXPENSES
General, operating and administrative                           8,394,541     398,656,760       380,703,817
Depreciation and amortization                                   2,153,168     102,253,926        65,354,359
New Business Initiatives                                        4,950,766     235,111,887       218,548,695
Goodwill Impairment                                                     -                -    1,250,000,000
                                                               15,498,475     736,022,573     1,914,606,871
Operating loss                                                  (201,679)      (9,577,737)   (1,011,185,221)

Interest expense                                                 839,241       39,855,563       130,624,647
Share of loss / (profit) on investments in an affiliate            2,530          120,137          (389,668)
Non operating income                                             386,123       18,336,962        15,581,288
Income before income taxes                                      (657,327)     (31,216,475)   (1,125,838,912)

Income taxes (benefit)                                         (2,468,310)   (117,220,043)       90,939,202
Net Income/(Loss)                                               1,810,983      86,003,568    (1,216,778,114)

Less: Preference dividend                                       2,688,970     127,699,178         3,508,219
Less: Premium on redemption of prefence shares                  4,255,633     202,100,000                  -
Net loss to Common Shareholders                                (5,133,620)   (243,795,610)   (1,220,286,333)


See accompanying notes to consolidated financial statements




                                                                                                         105
      FOR THE YEAR ENDED MARCH 31, 2003




106
      (Expressed in INR, except share data or as otherwise stated)
      Consolidated Statements of Stockholders' Equity

      Particulars                                                    Equity Shares Additional    Retained     Deferred stock      Accumulated         Total
                                                                               Paid -in          earnings     compensation           other        stockholder’s
                                                                               capital                                           comprehensive        equity
                                                                                                                                                     income
                                                             Shares           Par Value
      Balances at March 31, 2001                            49,666,667       248,333,335        362,815,016      176,293,362       (11,310,960)       1,894,084    778,024,837

      Comprehensive income:
      Net loss to common shareholders
      for the year ended March 31, 2002                              -                 -                 - (1,220,286,333)                   -                - (1,220,286,333)
      Translation adjustment                                         -                 -                 -               -                   -       84,296,263     84,296,263
      Increase in unrealised gains in available                      -                 -                 -               -                   -          320,370        320,370
                                                                                                                                                                                                                                ICICI Infotech Limited




      for sale securities, net of tax                                -                 -                 -               -                   -                -              -
      Comprehensive (Loss)                                           -                 -                 -               -                   -                - (1,135,669,700)
      Common stock issued (ESOP)                               10,220             51,100          332,150                -                   -                -        383,250
      Common stock issued to convert loans into equity      11,500,000        57,500,000    1,092,500,000                -                   -                -  1,150,000,000
      Deferred Stock Compensation                                    -                 -      (11,310,960)               -          11,310,960                -               -
      Premium payable on redemption of
      debenture no longer required                                   -                 -     30,719,178                      -               -                -      30,719,178
      Stock dividends (ESOP)                                         -                 -     26,187,829           (26,187,829)               -                -                -
                                                                                                                                                                                   (Formerly ICICI Infotech Services Limited)




      Cash dividends (inclusive of tax on dividends)                 -                 -               -        (185,386,904)                -                -    (185,386,904)
      Share issue expenses                                           -                 -    (11,231,063)                     -               -                -     (11,231,063)
      Statutory re-organisation (See note 21)                        -                 - (1,250,000,000)        1,250,000,000                -                -               -
      Balances at March 31, 2002                            61,176,887       305,884,435    240,012,150            (5,567,704)               -       86,510,717     626,839,598

      Comprehensive income:
      Net loss to common shareholders
      for the year ended March 31, 2003                              -                 -                  -     (243,795,610)                -                 -   (243,795,610)
      Translation adjustment                                         -                 -                  -                 -                -       (2,295,354)     (2,295,354)
      Comprehensive loss                                             -                 -                  -                 -                -                 -   (246,090,964)
      Common Stock Issued (ESOP)                                10,200            51,000            517,550                 -                -                 -        568,550
      Common stock issued                                      768,535         3,842,675         73,010,825                 -                -                 -     76,853,500
      Balances at March 31, 2003                            61,955,622       309,778,110        313,540,525     (249,363,314)                -       84,215,363     458,170,684
      Balances at March 31, 2003 (USD) - See note 2.2                          6,523,018          6,602,243       (5,250,859)                -        1,773,328       9,647,730



      See accompanying notes to consolidated financial statements
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




FOR THE YEAR ENDED MARCH 31, 2003
(Expressed in INR, except share data or as otherwise stated)

Consolidated Statements of Cash Flows

                                                                       For the year ended,
                                                                     USD               INR              INR
                                                                   31-Mar-03        31-Mar-03        31-Mar-02
                                                                   See note 2.2
Cash flows from operating activities
Net (loss)                                                        (5,133,620)     (243,795,610)    (1,220,286,333)
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization                                      3,214,879       152,674,623        119,852,010
Dividend on preference shares                                      2,762,843       131,207,397          3,508,219
(Gain) / loss on sale of marketable securities                        (8,293)        (393,827)          1,855,839
Dividend received                                                    (10,692)        (507,766)         (3,236,242)
Loss on sale of assets                                                51,548         2,448,001          7,462,329
Goodwill impairment                                                         -                -      1,250,000,000
Premium on redemption of preference shares                         4,255,633       202,100,000                   -
Share of loss/(profit) on investments in an affiliate                  2,530           120,137           (389,668)
Changes in operating assets and liabilities
(Increase)/decrease in accounts receivable, net                   (6,026,319)     (286,189,903)       246,741,525
(Increase)/decrease in accounts receivable from related parties    2,363,238       112,230,151      (208,845,689)
Increase in other advances                                          (582,099)      (27,643,880)       (61,049,139)
Increase in prepaid income taxes                                  (1,096,941)      (52,093,720)       (38,217,370)
Decrease in prepaid expenses                                           58,193         2,763,605         7,602,204
(Increase)/decrease in deposits and other advances                    963,395        45,751,616       (46,836,791)
Increase/(decrease) in accounts payable                            1,297,897         61,637,136     (207,563,144)
Increase/(decrease) in accounts payable to related parties             76,171         3,617,338        (1,000,000)
Increase/(decrease) in accrued payroll                              (369,671)      (17,555,664)        76,441,770
Increase/(decrease) in accrued expenses                               424,829        20,175,117     (211,932,367)
Increase/(decrease) in deferred taxes                             (2,007,304)      (95,326,857)        55,587,504
Net cash used in operating activities                               (236,217)      (11,217,894)     (230,305,343)

Cash flows from investing activities
Acquisitions, net of cash acquired                                (2,117,827)     (100,575,617)      (123,057,884)
Purchase of property, and equipment                               (7,268,331)     (345,173,051)      (303,630,308)
Proceeds from sale of property and equipment                        1,482,253        70,392,213         48,155,793
Investments                                                           (21,549)       (1,023,358)                 -
Marketable securities purchased                                   (6,799,153)     (322,891,780)    (1,052,886,957)
Marketable securities sold                                          8,200,548       389,444,035     1,211,017,334
Investments in an affiliate                                           (12,771)         (606,474)                 -
Net cash used in investing activities                             (6,536,830)     (310,434,032)      (220,402,022)

                                                                                                         Cont’d...




                                                                                                               107
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




FOR THE YEAR ENDED MARCH 31, 2003
(Expressed in INR, except share data or as otherwise stated)

Consolidated Statements of Cash Flows (Cont’d...)

                                                                     For the year ended,
                                                                   USD               INR              INR
                                                                 31-Mar-03        31-Mar-03        31-Mar-02
                                                                See note 2.2
Cash flows from Financing Activities
Proceeds from debt                                              33,072,344      1,570,605,621     1,026,772,516
Repayments of debt                                             (25,146,403)    (1,194,202,690)    (760,331,401)
Proceeds from preference shares Issued                          31,585,597      1,500,000,000                 -
Repayment of preference stock                                  (27,374,184)    (1,300,000,000)                -
Preference dividend paid                                        (2,762,843)      (131,207,397)                -
Premium paid on redemption of preference shares                 (4,255,633)      (202,100,000)                -
Proceeds from common stock issued - par value                       80,915          3,842,675                 -
Proceeds from common stock issued - premium                      1,537,394         73,010,825                 -
Proceeds from common stock issued - par value (ESOP)                 1,074             51,000                 -
Proceeds from common stock issued - premium (ESOP)                  10,898            517,550                 -
Accumulated other comprehensive income                             (41,587)        (1,974,984)                -
Proceeds from issue of stock options                                      -                  -          383,251
Payment of dividend (including dividend tax)                              -                  -    (185,386,904)

Net cash provided by financing activities                        6,707,572       318,542,600        81,437,462
Currency impact on translation adjustments                               -                 -        14,339,031
Net Increase/(decrease) in cash and cash equivalents               406,959        19,326,462      (354,930,872)
Cash and cash equivalents at the beginning of the year           2,085,582        99,044,297       453,975,169
Cash and cash equivalents at the end of the year                 2,492,541       118,370,759        99,044,297

Supplementary information
Conversion of Loan from Parent into Preference Shares                     -                   -   1,300,000,000
Conversion of Zero Coupon Optionally Convertible
Debentures into Common Stock                                             -                  -     1,150,000,000
Interest paid                                                      797,963         37,895,261       149,299,830
Income taxes paid                                                1,130,915         53,707,141        37,476,256
Dividend income re-invested                                          8,413            399,526         2,409,981


See accompanying notes to consolidated financial statements




108
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




Notes to Consolidated Financial Statements
For the Year Ended March 31, 2003
(In Indian Rupees, except share data or as otherwise stated)

1.   Company overview and description of business
     ICICI Infotech Limited (formerly ICICI Infotech Services Limited) (”ICICI Infotech”) was promoted by and is
     controlled by the ICICI Bank Group (“ICICI Bank”), a NYSE listed diversified financial services group. ICICI
     Infotech and its subsidiaries (the “Company”) is an information technology products and services company
     which provides software development and consulting services, IT products and solutions, business process
     outsourcing services and IT infrastructure networking and facilities management services. The Company
     has offices in India, United States of America, Singapore, Malaysia, United Kingdom, Germany, UAE and
     Australia.

     ICICI Infotech has three wholly owned subsidiaries, ICICI Infotech Inc., ICICI Infotech Pte Limited and ICICI
     Infotech Pty Limited, in United States of America, Singapore and Australia, respectively. ICICI Infotech SDN
     BHD, based in Malaysia, is a wholly owned subsidiary of ICICI Infotech Pte Limited. The Company has a
     50% ownership interest in Semantik Solutions GmbH, a joint venture in Germany (See Note 4).

2.   Summary of significant accounting policies

2.1 Basis of preparation
    The accounting and reporting policies of the Company used in the preparation of these consolidated financial
    statements expressed in Indian Rupee (INR) reflect industry practices and conform to accounting principles
    generally accepted in the United States of America. Certain amounts of previous year have been reclassified
    to conform to current years’ classification.

2.2 Convenience translation
    Solely for the convenience of the readers, the financial statements as of and for the year ended March 31,
    2003 have been translated into United States Dollars at the rate of USD 1 = INR 47.49, which was the
    average rate on that date. No representation is made that the INR amounts have been, could have been or
    could be converted into United States Dollars at such a rate or any other certain rate on March 31, 2003 or
    at any other date.

2.3 Principles of consolidation
    The accompanying consolidated financial statements include the accounts of the ICICI Infotech and all of
    its subsidiaries, which are more than 50% owned and controlled. All significant inter-company accounts and
    transactions have been eliminated on consolidation. Investments in which the Company owns over 20%
    but not in excess of 50% interest and where it can exercise significant influence are accounted under the
    equity method and accordingly the pro-rata share of their income/loss is included in the Statements of
    Operations. All other investments are accounted for under the cost method. The Company periodically
    evaluates the realizability of investments recorded under the cost method and recognizes a loss if a decline
    is determined to be other than temporary.

2.4 Use of estimates
    The preparation of financial statements in conformity with generally accepted accounting principles requires
    management to make estimates and assumptions that affect the reported amount of assets and liabilities
    and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements.
    They also impact the reported amount of earnings of the period presented. Management believes that the
    estimates used in the preparation of the consolidated financial statements are reasonable. The actual
    amounts could differ from those estimates.




                                                                                                           109
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




     accounts payable and accrued liabilities approximate fair value due to the short maturity of these items.
     The fair value of marketable securities is based on quoted market prices for those or similar investments.

2.10 Property and equipment
     Property and equipment, including significant improvements are stated at cost less accumulated
     depreciation. The interest costs incurred during the construction period of buildings are capitalized based
     on the average outstanding investment in the asset and the cost of funds borrowed. The capitalized
     interest cost is included in the cost of the relevant asset and is depreciated over the estimated useful
     life of the asset. Repairs and maintenance is expensed when incurred.

     Depreciation and amortization, has been provided on a straight-line basis, based on the estimated useful lives.

     Advances paid towards supply/construction of property and equipment are considered as Capital-work-
     in-progress and disclosed under property and equipment.

2.11 Capitalized software
     The Company capitalizes costs related to the development of software after technological feasibility has
     been established and until the product is ready for commercial release. All other costs are expensed as
     incurred. Software purchased for sale is also included in Capitalized software. Capitalized software is
     amortized over a period of five years and is included in cost of revenue.

2.12 Software Developed for Internal use
     The Company capitalizes costs related to the development of internal use software after the research
     and development stage is completed and management approves the development of such software.
     Capitalization ceases when it is ready for internal use. All other costs are expensed as incurred. Internal
     use software is amortized over a period of five years and is included in depreciation and amortization.
     Software developed for internal use is included in Property and equipment.

2.13 Impairment of Long Lived assets
     The Company evaluates the recoverability of its long-lived assets including capitalized software and
     identifiable intangibles, if any, whenever events or changes in circumstances indicate that their carrying
     amounts may not be recoverable.

     Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an
     asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are
     considered to be impaired, the impairment to be recognized is measured by the amount by which the
     carrying value of the assets exceeds the fair value of the assets, which is measured on a discounted
     cash flow basis.

2.14 Goodwill and Intangible Assets
     Effective June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141, Business
     Combinations and SFAS 142, Goodwill and Other Intangible Assets. SFAS 141 requires that all business
     combinations be accounted for under a single method – purchase method. Use of pooling of interest
     method is no longer permitted and is effective for business combinations initiated after June 30, 2001.SFAS
     142 requires that goodwill should no longer be amortized to earnings but instead be reviewed for
     impairment and is effective for fiscal years beginning after December 15, 2001 with earlier application
     permitted for entities with fiscal years beginning after March 15, 2001. SFAS 142 requires an annual
     impairment test to determine if the carrying value of goodwill is impaired. No impairment is recorded
     if the fair value of the reporting unit determined on the basis of discounted cash flows is greater than
     the net assets including goodwill. If the fair value of the reporting unit is less than the net assets including
     goodwill, an impairment charge is recorded to reduce the goodwill to its implied fair value, which is



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      computed by reducing the fair value of the tangible net assets from the fair value of the reporting unit.
      Intangible assets continue to be amortized over its useful lives. The Company adopted the requirements
      of SFAS 142 with effect from April 1, 2001.

2.15 Income taxes
     The Company utilizes the asset and liability method of accounting for income taxes. Under this method,
     deferred income taxes are recorded to reflect the tax consequences of future years differences between
     the tax base of assets and liabilities and their financial reporting amounts at each year-end based on
     enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected
     to affect taxable income. A valuation allowance is provided against the future benefit of deferred tax
     assets if it is determined that it is more likely than not that the future tax benefits associated with the
     deferred tax asset will not be realized.

2.16 Reimbursement of Expenses
     Reimbursements of out-of-pocket expenses of INR 103,764,467 and INR 56,092,562 in the year ended
     March 31, 2003 and March 31, 2002 respectively are included in revenue in accordance with Emerging
     Issues Task Force Consensus (“EITF’) 01-14 “Income Statement Characterization of Reimbursement
     received for ‘Out of Pocket’ expenses incurred”.

2.17 Retirement benefits

2.17.1 Defined Contribution Plans
     Provident Fund: Provident Fund is a defined contribution plan applicable to employees of the Company
     in India. Each eligible employee and the Company make an equal contribution at a percentage of the
     covered employees’ basic salary, as specified under the Employees Provident Funds and Miscellaneous
     Provisions Act, 1952. These contributions are made to a fund set up by the Company and administered
     by a Board of Trustees. Further, in the event the return on the fund is lower than the rate of return, which
     is specified annually by statute, such difference is contributed by the Company and expensed in the year
     there is a shortfall.

      Superannuation: Superannuation is a defined contribution plan for eligible employees of the Company
      in India under which the Company contributes annually a sum equivalent to 15% of the eligible employee’s
      annual basic salary to the manager of the Fund, the Life Insurance Corporation of India that undertakes
      to pay a lump sum and annuity payments under the scheme.

      The Company has no further obligation under Provident Fund or Superannuation Plan, beyond its
      contributions. Contributions to defined contribution plans are charged to income in the year in which
      they accrue.

2.17.2 Defined Benefit Plan
     Gratuity – India: Employees in India are entitled to benefits under the Payment of Gratuity Act 1972, a
     defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-
     sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit
     conferred by the Company on its employees is equal to or greater than the statutory minimum.

      The Company makes contributions to a fund administered and managed by the Life Insurance Corporation
      of India (LIC). Under this scheme, the settlement obligation remains with the Company, although LIC
      administers the scheme and determines the contribution premium required to be paid. The gratuity
      liability and periodic pension cost has been actuarially determined by independent consultants after
      considering appropriate discount rates, expected long term return on plan asset and increases in
      compensation levels. Differences between the amount paid to the LIC and the pension cost as determined
      by the independent actuaries has been recorded as a prepaid / (accrued) pension cost.


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     Dubai Plan: Employees of the Company’s Middle East & Africa division, who became employees of the
     Company after the acquisition of Insyst Technologies Ltd and Tricolor Infotech International Inc (T3I),
     Companies based out of Middle East, are entitled to gratuity benefits under a non-contributory defined
     benefit arrangement (“Dubai Plan”). Gratuity benefits for the Dubai Plan are calculated as a multiple of
     final monthly salary and service. The Plan provides a lump-sum payment to eligible employees at retirement
     or on termination of employment. The Dubai Plan has not been funded by the Company.

     The gratuity liability and periodic pension cost is actuarially determined by independent consultants after
     considering appropriate discount rates and increases in compensation levels. The valuation has not
     considered an expected return on plan assets since the Dubai Plan is not funded.

2.18 Share issue expenses
     Direct costs related to the issuance of shares are considered as a component of additional paid in capital.

2.19 Stock based compensation
     The Company uses the intrinsic value based method of Accounting Principle Board (APB) Opinion No.
     25, “Accounting for Stock Issued to Employees” to account for its employee stock-based compensation
     plans. The Company has, therefore, provided pro-forma disclosures as required by Statement of Financial
     Accounting Standards (SFAS) No. 123, ”Accounting for Stock-Based Compensation”. Options granted
     to non-employees are accounted for in accordance with FASB Interpretation 44, “Accounting for certain
     Transactions involving Stock Compensation, an Interpretation of APB 25”. Accordingly, such options are
     valued in accordance with guidelines under SFAS No. 123 and Emerging Issues Task Force EITF Issue
     96-18, ”Accounting for equity instruments that are issued to other than employees for acquiring or in
     conjunction with selling goods or services”. The fair value of Options granted to employees of erstwhile
     ICICI Limited (since merged with ICICI Bank Limited) are accounted for as dividend in accordance with
     Emerging Issues Task Force EITF Issue No 00-23, “Issues Related to the Accounting for Stock Compensation,
     an Interpretation of APB Opinion No. 25”.

     The Company has adopted the pro-forma disclosure provisions of SFAS No. 123. Had compensation cost
     been determined in a manner consistent with the fair value approach described in SFAS No. 123, the
     Company’s net income and earnings per share as reported would have changed to amounts indicated
     below:

       Year ended March 31,                                           2003                   2002
       Net Loss
       As reported                                                (243,795,610)        (1,220,286,333)
       Adjusted pro-forma                                         (304,403,986)        (1,265,642,511)

     The fair value of the options was estimated on the date of the grant using the Black Scholes Options
     Pricing Model, with the following assumptions:

                                                                             2003                2002
       Volatility                                                             65%                70%
       Dividend yield                                                       0.25%              2.75%
       Expected life                                                      10 years           10 years
       Risk-free interest rate                                                 8%               9.5%

2.20 Derivative financial instruments
     In accordance with SFAS 133, “Accounting for Derivatives”, derivative instruments are accounted for at
     fair value. Changes in the fair value of a derivative are accounted for in the statement of operations or a
     comprehensive income item depending on the nature of the hedge, if any.



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      The Company does not engage in derivatives trading, derivatives market making or other speculative
      activities.

2.21 Advertising costs
     Advertising costs are expensed as incurred and are included in general, operating and administrative
     expenses.

2.22 Dividends
     Dividends are recognized on approval by the Board of Directors.

2.23 Recently Issued Accounting Standards
     Costs Associated with Exit or Disposal Activities - The FASB has issued SFAS No. 146, "Accounting for
     Costs Associated with Exit or Disposal Activities," which is effective for all exit or disposal activities
     initiated after December 31, 2002. This statement requires that a liability for costs associated with an
     exit or disposal activity be recognized when the liability is incurred. Such costs include one-time employee
     termination costs, contract cancellation provisions and other costs typically associated with a corporate
     restructuring or other exit or disposal activities.

      Accounting for Stock-Based Compensation - The FASB has issued SFAS No. 148, "Accounting for Stock-
      Based Compensation – Transition and Disclosure," which is effective for fiscal years ending after December
      15, 2002. This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," by
      providing alternative methods of transition for the adoption of the fair value based method of accounting
      for stock-based compensation and by requiring additional disclosures. The alternative methods under
      SFAS No. 148 include the prospective method, the modified prospective method and the retroactive
      restatement method. The Company has adopted the disclosure requirements of SFAS No. 148 but has
      not determined if it will adopt the fair value based method of accounting for stock compensation pursuant
      to SFAS No. 123.

      Accounting and Disclosure Requirements for Guarantees – The FASB has issued Interpretation No. 45,
      "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
      Indebtedness of Others," the provisions of which apply to guarantees issued or modified after December
      31, 2002. This interpretation requires guarantors to record a liability for the fair value of certain guarantees
      at their inception. The Company does not have any guarantees that require recognition of a liability. The
      Company has adopted the disclosure requirements of FIN 45.

      Variable Interest Entities – The FASB has issued Interpretation No. 46, "Consolidation of Variable Interest
      Entities," the provisions of which apply immediately to any variable interest entity created after January
      31, 2003 and apply in the first interim period beginning after June 15, 2003 to any variable interest entity
      created prior to February 1, 2003. This interpretation requires the consolidation of a variable interest
      entity by its primary beneficiary and may require the consolidation of a portion of a variable interest
      entity's assets or liabilities under certain circumstances. The Company does not expect the effects of
      adoption to be significant.

3.    Reorganization of subsidiaries

3.1 Effective July 1, 2001 the Company had merged its US entities namely Command Systems Inc. with its
    subsidiaries in the US and Ivory International Inc. into ICICI Infotech Inc., a wholly owned subsidiary.

3.2 Effective July 1, 2001, the Company had restructured its business model where in it appointed ICICI
    Infotech Inc, its wholly owned subsidiary, to act as its marketing representative in the United States of
    America for the software project and product businesses. The Company reimburses cost of providing



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     on site project services and marketing & agency services and remunerates at a fixed percentage of the
     above costs. ICICI Infotech Inc. continues to be the principal in the staff augmentation business.

3.3 Effective December 1, 2001, assets and liabilities of Command International Software Pvt. Ltd. (Command)
    (wholly owned subsidiary of ICICI Infotech Inc.) were transferred to the Company for INR 47,463,727.
    The transfer was accounted for at the book value of assets and liabilities as the entities were under
    common control. During the year, a resolution to voluntarily wind up Command was passed. The Court
    approval in this regard is awaited.

3.4 During the year resolution to voluntarily wind up Command International Holdings, LLC, a wholly owned
    subsidiary, has been passed. The Court approval in this regard is awaited.

4.   Joint Venture

4.1 In July 2002, the Company co-promoted a Joint Venture, viz. Semantik Solutions GmbH (“Semantik”),
    with INNOVA Business Development and Holding GmbH belonging to the Fraunhofer Group, to focus
    on information technology initiatives in Germany. The Company invested approximately INR 606,474 for
    a 50% share in the Joint Venture. The Company’s share in the loss for the period ended March 31, 2003,
    accounted for in accordance with the equity method, was INR 403,434. The condensed unaudited net
    assets of Semantik (representing 50% of assets and liabilities related to the Company’s interest) are as
    follows:
                                                    INR million
    Capital Work in progress                           18.41
    Current Assets                                      7.09
    Current Liabilities                                20.79
    Unsecured Loan                                      5.24

4.2 In May 2000, the Company had co-promoted a joint venture with the Emirates Banking Group known
    as Tricolor Infotech International Inc. (“Tricolor”), in which the Company had a 50% ownership interest.
    In September 2002, the Company acquired the balance 50% in Tricolor (See Note 8).

5.   Cash and cash equivalents

     As at March 31,                                    INR 2003            INR 2002
     Cash on hand                                        345,044             279,656
     Cash at bank
        Current accounts                              62,153,527          33,021,920
        Export earners foreign currency accounts         420,460          12,863,546
     Fixed deposits                                   55,451,728          52,879,175
                                                     118,370,759          99,044,297

     The fixed deposits represent unrestricted short-term deposits with banks of surplus funds of the Company.
     Included in the fixed deposits are restricted balance of INR 7,741,347 and INR 2,128,313 as at March
     31, 2003 and 2002, respectively. Cash and cash equivalents include INR 15,811,186 and INR 10,966,537
     as at March 31, 2003 and 2002, respectively with ICICI Bank Limited.

6.   Marketable securities

     The aggregate fair value of marketable securities (classified as available for sale) as at March 31, 2003
     and 2002 is INR Nil and INR 65,971,032 respectively. The gross unrealized gains as at March 31, 2003
     and 2002, is INR Nil and INR 296,128, respectively.



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      The proceeds from sales of marketable securities for the year ended March 31, 2003 and 2002 is INR
      389,444,035 and INR 1,211,017,334 respectively. The gross realized gain for the year ended March 31,
      2003 is INR 393,827 and gross realised loss for the year ended March 31, 2002, was INR 1,855,839.

7.    Accounts receivable

      Accounts receivable, as at March 31, 2003 and 2002, net of allowance for doubtful accounts of INR
      19,185,262 and INR 13,420,000 amounted to INR 652,863,796 and INR 475,035,170 respectively.

      Accounts receivable from related parties (ICICI Bank, its subsidiaries and affiliates) amounts to INR
      207,854,997 and INR 320,085,148 as at March 31, 2003 and March 31, 2002, respectively.

8     Goodwill & Intangibles

8.1 Tricolor Infotech International Inc (“T3I”)
    In May 2000, the Company had co-promoted a joint venture with the Emirates Banking Group known
    as Tricolor Infotech International Inc. (“Tricolor”), in which it had a 50% ownership interest. In September
    2002, the Company acquired the balance 50% in Tricolor for a consideration of INR 107,455,544 pursuant
    to which Tricolor became a wholly owned subsidiary of the Company. The step up acquisition has been
    accounted for as a purchase and accordingly difference of INR 92,538,836 between the purchase price
    and the fair value of the balance net assets acquired has been recorded as marketing rights of INR
    76,764,583 and goodwill of INR 15,774,253. Effective January 1, 2003, assets and liabilities of Tricolor
    were transferred to a branch of the Company in the UAE for INR 34,547,881. The transfer has been
    accounted for at book value of assets and liabilities, as entities at that point were under common control.
    Consequently, the Company intends to wind up Tricolor. The results of operations of Tricolor are included
    in the accompanying financials statements from September 01, 2002. The Company’s share of profit of
    INR 283,297 for the period ended August 2002 (prior to Tricolor becoming wholly owned subsidiary) has
    been accounted under equity method. The condensed net assets of Tricolor at the date of acquisition
    were as follows:
                                                        INR in million
    Fixed Assets:                                             2.89
    Current Assets                                           18.58
    Liabilities:                                              6.58

8.2 Insyst Business Technologies Ltd.
    In December 2001, ICICI Infotech Pte Ltd, a wholly owned subsidiary of the Company, had acquired the
    business, assets and liabilities of Insyst Business Technologies (Middle East and Africa) (BVI) Ltd. (Insyst)
    for initial consideration of INR 125,094,715. Additional consideration based on measures as defined in
    the agreement is payable contingent upon achieving performance targets for the period from July 1,
    2001 to September 30, 2004. The acquisition was accounted for as a purchase and accordingly the
    difference of INR 67,080,295 between the purchase price and the fair value of the net assets acquired
    was recorded as goodwill. The results of operations of Insyst are included in the accompanying financial
    statements from January 1, 2002. Contingent amounts, when payable, shall be treated as additional
    goodwill. No additional payments were payable for the year ended March 31, 2003. The condensed net
    assets of Insyst at acquisition were as follows:
                                                       INR million
    Fixed assets (including capital
    Work in progress)                                     91.28
    Current Assets                                        75.55
    Current Liabilities                                   81.62
    Loans                                                 27.20



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     Insyst is a software product development company having software products namely ‘Orion’, ‘Premia’
     and ‘Merlin’.

8.3 In March 2001, ICICI Infotech Inc. (a wholly owned subsidiary of the Company) had acquired all of the
    common stock of Command Systems Inc (Command) and accounted the acquisition as a purchase. The
    excess consideration of INR 1,064,865,834 paid over the net assets acquired was preliminarily allocated
    to goodwill. During the year ended March 31, 2002, additions to goodwill due to acquisition related costs,
    primarily lease termination and employee severance costs and final valuation of net assets was INR
    81,474,186 out of which severance costs of INR 47,137,482 was included in accrued payroll.

8.4 In January 2001, the Company had acquired Ajax Software Solutions Limited (Ajax) at an aggregate cash
    purchase price of INR 177,569,000. Ajax was acquired primarily for the value that was perceived in the
    banking software products that it had developed. The acquisition was accounted under the purchase
    method. Based on the information available at the time of acquisition, a preliminary allocation was made
    of an amount of INR 180,000,000 towards cost of software products. Based on a valuation of the software
    products, during the year ended March 31, 2002, the value ascribed to the software taken over was INR
    32,800,000. Accordingly, INR 147,200,000, being excess of purchase price paid over the fair value of the
    assets acquired was reclassified as goodwill during the year ended March 31, 2002.

8.5 The annual impairment test for the year ended March 31, 2003 did not indicate any impairment to
    goodwill. During the year ended March 31, 2002, the Company had written off INR 1,250,000,000 as
    goodwill impairment. The Company had attributed the loss in value of goodwill to a global slowdown
    in the IT related businesses and adverse short-term business conditions. Included in Depreciation and
    Amortisation is amortisation of marketing rights which is being amortized over five years, amounting to
    INR 3,838,230 and INR Nil for the years ended March 31,2003 and 2002, respectively.


9.   Property and equipment and Capitalized Software

9.1 Property and equipment
    As at March 31,                            Estimated Life (Years)        INR 2003          INR 2002
    Land                                                          --        20,882,886        20,882,886
    Leasehold rights to Land                    Over period of lease          5,238,830        5,238,830
    Buildings – Leasehold                                        60        278,174,430       223,760,100
    Buildings – Owned                                            60         12,157,130        10,857,933
    Plant, Machinery and
    Electrical Installations                                  5 – 22       118,467,466       116,975,422
    Leasehold improvements                                Lower of 5
                                                     or lease period        15,717,036         4,919,813
     Computers                                                 1–6         218,840,638       261,943,635
     Software developed for
     internal use                                              1–5         133,577,110       101,654,931
     Furniture, Fixtures and
     Office Equipment                                         5 – 16       156,427,671       134,522,256
     Vehicles                                                 5 – 10        19,091,301        21,796,759
     Capital work-in-progress                                               15,318,039         5,784,742
                                                                           993,892,537       908,337,307
     Less: Accumulated depreciation
     and amortization                                                      260,071,106       165,872,337
     Net                                                                   733,821,431       742,464,970




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9.2 Capitalized Software
    As at March 31,                                                         INR 2003          INR 2002
    Software
    - Capitalized                                                          328,440,038       144,805,026
    - work-in- process                                                     101,143,497        99,858,561
                                                                           429,583,535       244,663,587
      Less: Accumulated amortisation                                        77,314,369        29,506,856
      Net                                                                  352,269,166       215,156,731

      Included in Capitalized Software are intellectual property rights of two software products, namely “Spot
      on Suite” acquired by the Company for INR 20,000,000 and “ Cross Roads” for INR 14,884,000. Amortization
      of capitalized software debited to cost of revenue amounted to INR 50,420,697 and INR 14,464,101 for
      the years ended March 31, 2003 and 2002 respectively.

10. Related party transactions

10.1 Employee loans
     The Company grants loans to employees for acquiring assets such as property and vehicles. Such loans
     are repayable over fixed periods ranging from 60 months till retirement age. The rates at which the loans
     have been given to employees vary between 3.5% to 6% per annum. As at March 31, 2003 and 2002,
     amounts receivable from employees amounting to INR 55,957,061 and INR 47,500,557, respectively are
     included in other advances.

10.2 Other related parties transactions
     ICICI Bank and its subsidiaries and affiliates
     Nature of transactions                                                  INR 2003          INR 2002
     Revenue                                                             1,223,954,100      1,269,962,090
     Rent received                                                            1,503,391         1,984,598
     Rent expense                                                           15,371,257         62,901,582
     Purchase of marketable securities
     available for sale                                                    322,891,780      1,020,500,000
     Sale of marketable securities available for sale                      389,444,035        962,873,301
     Dividend income (including profit on sale
     of marketable securities)                                                 840,516         2,697,358
     Sale of assets                                                         39,868,588                  -
     Net Gain / (Loss) arising out of sale of assets                         1,133,228                  -
     Bad Debts written off                                                  15,147,386                  -
     Expenses allocated                                                     17,845,719        13,379,301
     Interest paid                                                          17,355,817       122,894,847
     Interest and miscellaneous income received                                927,360           397,682
     Insurance premium paid                                                 11,629,196                  -

10.3 The Company provided software development services for Semantik Solutions, an equity basis affiliate
     of the Company and recorded revenues of INR 35,938,933. Semantik Solutions has capitalized this as
     work-in-process towards Capitalized software and accordingly, the Company adjusted its revenues to
     eliminate INR 4,146,800 which is the margin related to its proportionate ownership percentage.

10.4 The Company had a long- term contract with ICICI Bank to provide ‘ Business Process Outsourcing
     Services’, which was cancelled by ICICI Bank. ICICI Bank paid a compensation of INR 150,000,000 towards
     cancellation of the contract, which is included in revenues.




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11. Commitments

11.1 Operating leases
     The Company has long term operating leases for various office facilities and equipment. Future minimum
     lease payments at March 31 for these leases net of minimum rentals to be received are as follows:

     Years                                                                  INR
     2004                                                               43,939,984
     2005                                                               36,823,200
     2006                                                               26,103,591
     2007                                                               14,350,386
     2008                                                               14,709,125
     Thereafter                                                         50,404,984

     The Company has month to month arrangement with ICICI Bank for certain properties. Rent for the years
     ended March 31, 2003 and 2002 was INR 15,371,257 and INR 62,901,582 respectively.

11.2 Other commitments
     The Company is obligated under a number of capital contracts. Capital contracts are job orders of a
     capital nature, which have been committed. Estimated amounts of capital contracts remaining to be
     executed (net of advances), aggregated INR 33,935,896 and INR 54,044,564 as at March 31, 2003 and
     2002, respectively.

11.3 Export obligations
     The Company has export obligations (on account of its commitment to Software Technology Parks of
     India) to the tune of INR 306.10 million. The Company has fulfilled this obligation to the extent of INR
     288.05 million and expects to fulfill entire obligation by fiscal 2004.

11.4 Bank guarantees
     Nature of guarantee               Amount (INR)       Approximate term      Approximate expiry term
     Performance guarantee              26,982,900         6 - 12 months             3 - 7 months
     Bid guarantee                      3,350,000           3 – 6 months             0 - 4 months

12. Debt
    As at March 31,                                                        INR 2003           INR 2002
    Rupee Term Loans                                                      328,118,354        99,883,655
    Cash Credit                                                           149,787,391                 --
    Asset Finance Loans                                                             --        1,619,159
    Total Debt                                                            477,905,745       101,502,814
    Less: Current portion                                                 347,910,572         2,573,492
    Debts excluding current portion                                       129,995,173        98,929,322

12.1 During the year, the Company has taken various rupee terms loans totaling to INR 42,500,000 from ICICI
     Bank Limited. As at March 31, 2003, rupee term loans amounting to INR 136,774,911 is payable to ICICI,
     of which INR 77,562,917 is secured by an assignment on the 3 floors of the leased property located at
     International Infotech Park, Vashi, Navi Mumbai and INR 10,737,958 is secured against the vehicles of
     the Company and the balance INR 48,474,044 is against receivables of housing loans given to employees
     by the Company.

12.2 As at March 31, 2003 and 2002, loans amounting to INR 347,910,572 and INR 2,573,492 respectively,
     are repayable within a year. The effective rate of interest on rupee loans is 8.45% to 13.25% per annum



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      and 11.50% to 13.75% per annum for the years ended March 31, 2003 and 2002, respectively. For the
      years ended March 31, 2003 and 2002 an amount of INR 40,258,997 and INR 130,624,647 respectively
      has been incurred towards interest on rupee loans and INR 127,699,178 and INR 3,508,218 respectively
      has been incurred towards dividend on preferred stock.

12.3 The maturities of debt are as follows:
     Years                                                                                          INR
     2004                                                                                      347,910,577
     2005                                                                                        7,664,359
     2006                                                                                        8,665,018
     2007                                                                                        9,797,031
     2008                                                                                        7,843,415
     Thereafter                                                                                 96,025,345

13. Employee stock option plan

      In April 2000, the Company approved an Employee Stock Option Plan (ESOP). Under the ESOP the  ,
      Company is authorized to issue up to 12 million shares of Common Stock to eligible employees. The
      options vest in a graded manner over three years with 20%, 30% and 50% of the grants vesting at the
      end of each year. The options can be exercised within 10 years from the date of the grant.

      Option activity during the years ended March 31, 2003 and 2002 is as follows:
                                                                                                 Weighted
                                                                                Number            Average
                                                                              of options         Price INR
      Shares under option
        Outstanding, March 31, 2001                                           2,120,400

      Activity during 2001-02
        Granted, price equals fair value                                      2,044,800                  68
        Exercised                                                                (10,220)                68
        Forfeited                                                              (221,960)
        Expired                                                                         -
        Outstanding, March 31, 2002                                           3,933,020
      Activity during 2002-03
        Granted, price equals fair value                                        713,500                100
        Exercised                                                                (10,200)               56
        Forfeited                                                              (435,360)
        Expired                                                                         -
        Outstanding, March 31, 2003                                           4,200,960
        Exercisable, March 31, 2003                                           1,235,070

      The following tables sets forth details of options outstanding and exercisable at March 31, 2003:
                                        Options Outstanding                 Options Exercisable
       Range of            Number             Weighted          Weighted           Number         Weighted
       Exercise          Outstanding           Average          Average          Exercisable      Average
      Prices (INR)                           Contractual        Exercise                          Exercise
                                                  Life            Price                             Price
      37.50 – 100         4,200,960              5.07             60.31           1,235,070         46.22




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     With respect to options granted to employees of ICICI Bank, the fair value of the options amounting to
     INR 21,889,692 was recorded as dividend during the fiscal 2002. The Company has not granted any
     options to the employees of ICICI Bank during the year ended March 31, 2003.

     The weighted average remaining contractual life as at March 31, 2003 and March 31, 2002 was years
     9.06 and 9.05 respectively.

14. Income taxes
    The tax effects of significant temporary differences are reflected through deferred tax asset/liabilities,
    which are included in the consolidated balance sheets of the Company. The deferred income tax asset
    / liabilities have been determined by applying the income tax rate of 36.75% and 35.70% for the years
    ended March 31, 2003 and 2002 respectively, as per the enacted income tax laws of the respective years.

     Under the Indian Income-tax Act, 1961, the Company is eligible to claim income tax exemption benefits
     with respect to profits earned from export revenues from its units registered under the Software Technology
     Parks ('STP'). The benefit as per the current tax laws is restricted to 10 consecutive assessment years,
     beginning with the assessment year relevant to the previous year in which the Company commences
     operations from each location. The Company has three such locations. These benefits will expire for
     certain of the Company's units beginning from April 1, 2009. For the year ended March 31, 2002, the
     Company had elected not to be treated as eligible under this scheme. The Company has elected to be
     treated as eligible at March 31, 2003 and expects to continue being treated as such in the future. No
     related deferred tax assets or liabilities are recognized for timing differences that reverse entirely within
     the remaining tax free period. Accordingly, the Company has reversed approximately INR 96,675,625
     of net deferred tax liabilities in 2003.

     The components of deferred tax assets and liabilities as below:

     As at March 31,                                                           INR 2003            INR 2002
     Deferred Tax Asset
     Net operating losses                                                    179,191,342         116,376,971
     Goodwill amortization                                                     5,406,462           5,389,179
     Accrued expenses                                                         16,894,825           5,968,289
     Property & Equipment                                                      3,442,330           2,868,171
     Provision for accounts receivable                                         5,368,158           5,249,660
     Retirement benefits                                                         457,899                    -
     Accrued Wages                                                             5,129,033           5,596,423
     Others                                                                      342,550             794,281
     Total Deferred Tax Asset                                                216,232,599         142,242,974

     Less: Valuation Allowances                                              183,632,343         138,585,460
     Deferred Tax Asset                                                       32,600,256           3,657,514

     Deferred Tax Liabilities
     Property and equipment                                                   31,285,587          96,593,101
     Retirement benefits                                                               -           1,076,601
     Total Deferred Tax Liabilities                                           31,285,587          97,669,702
     Net Deferred Tax Asset / (Liability)                                      1,314,669        (94,012,188)

     A valuation allowance has been provided based on the determination that it is more likely than not that
     the benefit associated with the deferred tax asset will not be realized.




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ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




      The Company has Net Operating Loss (“NOL”) carry-forwards in its US subsidiary for federal and state
      tax purposes of approximately INR 130,724,785, in India of approximately INR 42,542,344 and in Australia
      INR 33,204,491as at March 31, 2003, that expires through the year 2022, year 2010 and indefinitely
      respectively. The utilisation of these NOL’s may be limited by Internal Revenue Code Section 382.
      Command International Holdings LLC, a wholly owned subsidiary of US subsidiary is eligible for certain
      tax exemptions under the laws of Mauritius.

      Following is the reconciliation of income taxes at Indian statutory income tax rates to the current portion
      of Income Tax expense as reported:

      Years ended March 31,                                                    INR 2003           INR 2002
      Net Income before taxes                                                (31,216,477)     (1,125,838,912)
      Enacted tax rates in India                                                  36.75%              35.70%
      Statutory tax provision                                                (11,472,055)       (401,924,492)
      Increase/(Decrease) due to:

      1. Income exempt from taxes                                             (1,703,551)         (1,166,711)

      2. Goodwill                                                                         -     445,109,436

      3. State taxes and minimum taxes                                         7,330,000           2,764,655

      4. Foreign subsidiary income / loss included
         in net income but taxed at other rates                                3,486,466          44,805,558

      5. Change in valuation allowance                                        22,925,703          37,322,841

      6. Deduction allowed on prior returns                                  (30,605,154)         (7,816,187)

      7. Reversal of net deferred tax liability
         due to change of tax status                                         (96,675,625)                   -

      8. Other                                                               (10,505,827)        (28,155,898)

      Income Tax Expense / (Benefit) as reported                           (117,220,043)          90,939,202

      The components of income tax expense are set out below:

      Years ended March 31,                                                    INR 2003            INR 2002
      Current Taxes
      Domestic Taxes                                                         (19,888,258)         26,570,000
      Foreign Taxes                                                           (2,004,928)          8,781,698
                                                                             (21,893,186)         35,351,698
      Deferred Taxes
      Domestic Taxes                                                         (95,326,857)         55,587,504
      Foreign Taxes                                                                     --                 --
                                                                              (95,326,857)        55,587,504
                                                                            (117,220,043)         90,939,202




122
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




15. Retirement benefits

15.1 Defined Contribution Plans
     The Company contributed INR 24,237,506 and INR 20,385,826 to the Provident Fund Plan in the years
     ended March 31, 2003 and 2002 respectively. The Company contributed INR 5,107,946 and INR 4,050,915
      to the Superannuation plan for the years ended March 31, 2003 and 2002 respectively.

15.2 Gratuity
     Gratuity
     As at March 31,                                Dubai            Dubai          India           India
                                                  INR 2003         INR 2002       INR 2003        INR 2002
    Change in benefit obligations
    Beginning of the year *                      17,021,665       15,611,110     30,395,564      20,817,597
    Service cost                                  4,535,017        1,066,278      7,993,221       5,392,854
    Interest cost                                 1,505,731          377,519      2,973,986       2,234,373
    Benefits paid                                (1,027,862)        (255,180)    (1,311,401)     (1,010,227)
    (Gain) / Loss                                (3,326,332)      (1,595,634)   (12,952,524)      2,960,967
    Benefit obligation at
    the end of the year                          18,708,217       15,204,093     27,098,846      30,395,564

    * Included in beginning of the year, is an amount of INR 1,817,572 related to Tricolor Infotech International
    Inc. (T3I)opening benefit obligations.

    As at March 31,                                 *Dubai           *Dubai         India            India
                                                   INR 2003         INR 2002      INR 2003         INR 2002
    Change in plan assets
    Plan assets –
    beginning of the year                                    -              -    15,892,101      11,240,802
    Expected return                                          -              -     1,922,458       1,652,247
    Actual contributions                                     -              -     5,556,001       4,356,824
    Actual benefits                                          -              -    (5,562,601)     (1,266,687)
    Gain / (Loss)                                            -              -      (413,015)        (91,085)
    Plan assets - end of the year                            -              -    17,394,944      15,892,101

    * Not applicable as the plan is unfunded

    As at March 31,                               Dubai              Dubai           India          India
                                                 INR 2003          INR 2002        INR 2003       INR 2002
    Funded status                              (16,660,146)       15,204,093     (9,703,902)    (14,503,463)
    Unrecognized net
    transition Obligation or
    (asset) remaining                                        -              -       387,414         445,237
    Unrecognized prior
    service cost                                             -              -     8,021,709       8,978,955
    Unrecognized net
    (gain)/loss                                 (3,150,458)       (1,850,813)       297,690       9,145,675
    (Accrued)/ prepaid benefit                 (21,858,676)      (17,054,906)      (997,089)      4,066,405




                                                                                                          123
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




      Year ended March 31,                            Dubai               Dubai       India              India
                                                    INR 2003            INR 2002    INR 2003           INR 2002
      Net periodic gratuity cost
      Service cost                                  4,535,017           1,066,278    7,993,221         5,392,854
      Interest cost                                 1,505,731             377,519    2,973,986         2,234,373
      Expected investment return                            -                   -   (1,922,458)       (1,652,247)
      Amortization of transition
      (Assets) / Liabilities                                   -                -       57,822            57,822
      Amortization of prior
      service cost                                          -                   -     957,245            957,245
      Actuarial (gain) / loss                        (27,648)                   -     559,680            391,187
      Net periodic gratuity cost
      for the year                                  6,013,100           1,443,797   10,619,496         7,381,234

      The assumptions used in accounting for Gratuity Plan in the years ended March 31, 2003 and 2002 are set
      out as below:

                                                                   Dubai Plan                     India Plan
      Year ended March 31,                              2003                 2002        2003              2002
      Discount rate                                      8%                  10%          8%               10%
      Rate of increase in compensation levels            7%                   9%          7%                 9%
      Rate of return on plan assets                        *                    *        7.5%              9.5%
      * Not applicable as the plan is not funded.

16. Foreign currency gain/(loss)
    For the years ended March 31, 2003 and 2002 net foreign exchange gains / (loss) included in Non operating
    income was INR (4,644,236) and INR 3,238,156 respectively.

17. Advertising
    Advertising costs for the years ended March 31, 2003 and 2002 were INR 9,685,480 and INR 8,674,764,
    respectively.

18. Common stock
    The Company’s authorized capital consists of common stock. The Company has 100,000,000 authorized
    shares of common stock with par value of INR 5 each.

      During the year 2003, the Company issued 768,535 common stock of INR 5 par value at a premium of INR
      95 to Emirates Bank International PJSC. Further 10,200 common stock of INR 5 were issued to employees
      under ESOP .

      During the year 2002, the Company issued 11,500,000 common stock of INR 5
      par value at a premium of INR 95 to ICICI towards conversion of optionally convertible debentures. Further
      10,220 common stock of INR 5 were issued to employees under ESOP      .

      For the year ended March 31, 2003 and 2002 the Company has paid dividend of INR Nil and INR 185,386,904
      inclusive of tax on dividend of INR Nil and INR 17,159,224 respectively.

19. Preferred stock
    The Company has 300,000,000 authorized shares of preferred stock with par value of INR 5 each. During
    the year ended March 31, 2002, the Company issued 260,000,000 preferred stock of INR 5 par value to ICICI
    towards conversion of loans. In March 2003, the Company redeemed these preference shares. Simultaneously,



124
ICICI Infotech Limited
(Formerly ICICI Infotech Services Limited)




     the Company issued 300,000,000 6.35% preferred stock of INR 5 par value to ICICI Bank Limited and paid
     a premium of INR 202,100,000. These preferred shares are redeemable on March 31, 2012 at par. The
     premium paid has been treated as a dividend to ICICI Bank, the controlling shareholder.

20. Significant customers
    ICICI, its subsidiaries and affiliates were largest customers of the Company accounting for 46% and 47%
    of its revenue for the years ended March 31, 2003 and 2002.

21. Statutory re-organization
    In June 2002, the Company received a court order from the Bombay High Court approving the reduction
    in the value of its investment account to be adjusted against additional paid in capital. The reduction in value
    was as a result of the write down of goodwill at ICICI Infotech Inc., a wholly owned subsidiary. Accordingly,
    the statement of stockholders equity has been adjusted to increase retained earnings by INR 1250,000,000
    and reduce additional paid in capital by the similar amount.

22. Litigation
    The Company is subject to legal proceedings and claims, which have arisen, in the ordinary course of its
    business. Management believes, based on consultation with counsel that the ultimate resolution of the
    litigations will not have a material adverse effect on the Company’s results of operations, financial conditions
    or liquidity. However, the final outcome of the litigations can not be predicted with certainty and accordingly,
    no assurance can be given that the ultimate resolution of the litigation will not have a material impact on
    the Company’s results of operations, financial condition or liquidity.

23. Risks and uncertainties of doing business
    Many of the Company’s engagements involve projects that are critical to the operations of its customers’
    businesses and provide benefits that may be difficult to quantify. Any failure in a customer’s system could
    result in a claim for substantial damages against the Company. Although the Company attempts to limit
    contractually its liability for damages arising from errors, mistakes or omissions in rendering its information
    technology services, there can be no assurance that the limitations of liability set forth in its services contracts
    will be enforceable in all instances or would otherwise protect the Company from liability for damages.
    Although the Company maintains general liability insurance coverage, including coverage for errors or
    omissions, there can be no assurance that such coverage will continue to be available on reasonable terms
    or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not
    disclaim coverage as to any future claim. The successful assertion of one or more large claims against the
    Company that exceed available insurance coverage, or changes in the Company’s insurance policies, including
    premium increases or the imposition of large deductible or co-insurance requirements, could adversely
    affect the Company’s business, financial condition and results of operations.




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Abhimanyu Sukhwal Abhimanyu Sukhwal Associate Consultant
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