Edserv Softsystems Ltd

Your Directors have pleasure in presenting their report for the year ended 31st March2011 together with the Balance Sheet as at 31st March 2011 and the Profit and Loss accountfor the year ended on that date.

Performance Review

Your company's performance has been significant this year on revenues as well as onreach and spread in its market space. Your company has grown spectacularly in revenues onAcademics, Test Preps, Skill development training, Employment and Careers, and knowledgesharing on the move. Your company has been broadly carrying out business in the fourbusiness streams viz., Online retail learning and careers solutions (LAMPSGLOW), in-campusschools and college support (VIDHYADHANA), Skill development training on employability(EDSEED), knowledge sharing solutions on the move (HUMTHUM). This year, your company hassigned up with Gujarat Government on Skill Development Centers (SUCs), with IL&FSeducation for moving their e-learning contents for K thru 12 into its online portal, withSreeram Coaching Point (SCP) for CA courses online, among several other such relationshipsfor growth. Your company has sustained margins of business, thanks to the well researchedtechnology-led business model that seamlessly services students and job seekers onlinewith affordable rates using Broadband and easy-to-reach internet enabled devices. Yourcompany has launched a path-breaking solution for humanity to share their knowledge andinformation on the move using their low-cost smartphones. This product called HUMTHUM hasalready gained significant acceptance with over 100,000 users downloading its apps frommobile phones. Your company has signed up with SAMSUNG and BLACKBERRY to move learning andcareer solutions in Mobile phones to reach the unreached in breadth and width of thecountry.

During the year, your company increased its reach into Schools through Vidhyadhana.Your company has also spread its wings across India with Dealers and Distributors sellingthe online learning and career solutions through instant and seamless mobile basedtransfers of credits onpayment.

Going forward, your company has plans to multifold its reach to service with a targetof 1 Crore user base in the next 1 year with a worldwide reach as target. This isachievable considering the fact that your

Financial Highlights

Company's solutions are now in Mobile phones, Tablets, DTH technologies apart fromLaptop and Desktop connecting Internet. Moreover, the Content-on-Lease (CoL) model,another path-breaking solution from your company has ensured that world-class contents andsolutions from third-party content owners are portable and usable to the community atlarge without having to spend time, money, and effort in every such content.

Overall, the year has been a landmark year for the company having grown in revenues,technology, reach and spread, collaborating world-class brands to bring out the learningand career solutions to the needy instantly and seamlessly.

Dividend

Your Directors are pleased to recommend a final dividend of 30% 3/- per Equity share ofRs. 10/-) for the year ended 31.03.2011. After approval by the shareholders at the ensuingAnnual General Meeting, the dividend will paid in line with the applicable regulation.

Fixed Deposit

During the year under review, the Company has not accepted any Fixed Deposit from thepublic. Capital Issues During the Year (upto the date of this report)

1. Allotment of equity shares 2987804 Equity Shares on Qualified InstitutionalPlacement:

During the year the company has allotted 2987804 Equity Shares at a price of rs. 205/-Per share ie., Rs.10/- each, at a premium of Rs. 195 aggregating to an extent of Rs.61,24,99,820 to Qualified Institutional Buyers.

2. Issue of 336235 equity shares on preferential basis to Non-Promoters:

During the year the company has issued 3,36,235 Equity Shares at a price of Rs.. 214/-per share i.e. ? 10/- each at a premium of Rs. 204/- aggregating to an extent of Rs.7,19,54,290 to the non- promoters of the company.

3. Issue of 11,68,224 Equity Warrants to non-promoters:

During the year the company has issued 11,68,224 Equity warrants at a price of Rs. 214per warrant i.e.,10/- each at a premium of 204/- per warrant aggregating to an extent ofRs. 25,00,00,000 on Preferential Basis to Non-Promoters.

4. Issue of equity shares 19930 Equity Shares and 467290 Equity Warrants onpreferential basis to Non Promoters:

During the year the company had issued 19930 Equity Shares of Rs. 10/-each, and 467290Fully Convertible Equity warrants of Rs.10/- each for cash at a price of Rs. 214/- perwarrant/share i.e. Rs.10/- each at a premium of Rs. 204/- aggregating to an extent of Rs.10,42,65,080 on preferential allotment basis to the Non-Promoters of the Company.

5. Issue of 155763 equity shares to non-promoter by conversion of fully convertiblewarrants:

During the year the company had issued 1,55,763 shares of face value Rs. 10/- each forcash at a price of Rs. 214/- per share i.e. Rs. 10/- each at a premium of Rs.204/-aggregatingtoRs. 3,33,33,282/- on preferential basis to a non-promoter.

6. Issued 16,00,000 GDRs underlying 80,00,000 Equity Shares at an Offer Price of USD14.93 Per GDR (1NR 132.49 Per share).

During the year the company had issued 16,00,000 GDRs underlying 80,00,000 EquityShares at an Offer Price of USD 14.93 per GDR (INR 132.49 per share} aggregating to Rs.1,05,99,10,560/- to THE BANK OF NEW YORK MELLON, DR

Subsidiary Company

Vidhyadhana Education P Ltd., is a wholly owned subsidiary company incorporated in theyear 2009. The company works with schools in 3 different business models viz., Online ERPservices, Hitech School Solutions, Investment based end-to-end infrastructure supportsolutions. Vidhyadhana has increased its presence this year into a number of schoolscompared to lastyear.

A statement in respect of details of subsidiary company viz Vidhyadhana EductionPrivate Limited pursuant to Section 212 of the Companies Act, 1956 is attached herewith tothis report.

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors'report, Balancesheet and Profit & Loss account of our subsidiaries. The Ministry ofCorporate Affairs, Government of India vide its circular no. 2/2011 dated February 8,2011has provided an exemption to companies from complying with Section 212, provided suchcompanies publish the audited consolidated financial statements in the Annual Report.Accordingly, the Annual Report 2010-11 does not contain the financial statements of oursubsidiaries. The audited annual accounts and related information of our subsidiaries,where applicable, will be made available upon request. These documents will also beavailable for inspection during business hours at our registered office in Chennai, India.The same will also be published on our website

Directors

Mr.S.Arvind, Director of the company retire at the ensuing Annual General Meeting ofthe company pursuant to the provisions of Section 255 of the Companies Act, 1956 andhebeing eligible, seek re-appointment.

Auditors

The Statutory Auditors, M/s. Raj and Ravi, Chartered Accountants, retire at theconclusion of the ensuing Annual General Meeting and are eligible for re-appointment forthe current financial year. The auditors have expressed their willingness to continue inoffice if re-appointed. Your Board recommends their re-appointment.

A) Conservation of Energy

Though the company has not carried on any manufacturing activities, it had taken stepsto conserve energy in its office/godown use, consequent to which energy consumption hasbeen minimized. No additional Proposals/Investments was made to conserve energy. Since thecompany has not carried on any industrial activities, disclosures regarding impact ofmeasures on cost of production of goods, total energy consumption, etc. Are notapplicable.

B) Technology Absorption

The company has not adopted/intend to adopt any technology for its business and henceno reporting is required to be furnished under the heading.

C) Foreign Exchange Earnings & Outgo

Particulars of Employees Pursuant to Section 217(2A) of the Companies Act, 1956

As required under the provisions section 217(2A] of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, as amended, the names and otherparticulars of employee are set out in the Annexure to this report

Directors' Responsibility Statement The Directors confirm that

a) ln the preparation of the annual accounts, the applicable accounting standards havebeen followed

b) Appropriate accounting policies have been selected and applied consistently andjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as on 31st March, 2011 and of the profit ofthe company for the year ended 31st March, 2011

c) Proper and sufficient care have been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

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

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, CorporateGovernance Report and Auditor' certificate regarding compliance of the same are made partof this Annual Report and the Employees.

Acknowledgements

The Directors acknowledge with gratitude and wish to place on record their appreciationfor the valuable support and kind co-operation extended to the company by the Company'sBankers, Financial Institutions, Government Authorities, Shareholders,

For and on behalf of the Board of Directors

Annexure To Directors1 Report

Statement of particulars of employees pursuant to section 217 (2A) of the companiesact, 1956.