Scintilla Software Technology Ltd

Dear Shareholders

Our Directors have pleasure in presenting the 20th Annual Report and the Audited Statement of Accounts of the company for the financial year ended 30st April, 2005.

FINANCIAL HIGHLIGHTS

(Rs.'000)

2 MANAGEMENT ANALYSIS AND DISCUSSION

COMPANY PERFORMANCE

The sales of the Company for the year ended 30th April, 2005 touched Rs.26.66 lakhs and Net Profit were Rs.1.23 lakhs. Your Company has improved its position in the domestic market and software industry. The year under review was one of them most challenging years for IT industry all over the world. Constant efforts are put to redesign the planning and implementation process to aim for leadership on the theme of rapid growth and differentiation. We are confident that the steps taken will help achieve the size, scalability, brand and ambition necessary to create the next generation IT Solutions arid Services Company.

REVIEW OF OPERATIONS

The Indian IT Industry is one of the top 10 industries in India. The IT Industry has shown signs of recovery and IT/Technology expenditure is expected to rise this year as against a stagnant trend in the past two years. The domestic growth has been driven by rapid expansion of IT Infrastructure by Government, Education, Telecom, BPO and Corporate segments. The Indian IT Industry is interspersed with several large, medium and is nail players offering their services. The competition and challenges to medium size niche players like SSTL is emerging primarily from large system integration companies.

Your Company is strong in providing IT Infrastructure set-up, support and management as well as in the system integration business. The wide range of products and solutions, domain expertise and competency pools created by the Company over the year has helped in customer retention and addition of new customer accounts. Clients are looking for a company that is a trusted advisor and a strategic partner. In response to clients needs, we have been working on several new service initiatives. Your company seeks long term partnerships with clients while addressing their various IT requirements. Your Company's customer centric approach has resulted in high levels of client satisfaction.

Your Company has reorganized to face new challenges of greater client expectations, rapidly changing business scenario and heightened competition. As a part of it business process reengineering the Company is constantly analyzing the business areas to focus on the most profitable and productive ones. This has helped in maintaining the profitability levels despite the reduction in the sales turnover. Your Company has also helped many of its clients improve their processes and systems by providing consulting services and high-end products and solutions.

OUTLOOK

The domestic IT spends is likely to continue its current upward trend. Organizations have been increasing their IT spends for process improvements and efficiency enhancements to face competition and increased productivity. Organizations are widely outsourcing the various activities of managing their IT infrastructure to increase operational efficiency.

Your Company has clearly drawn its roadmap as a dominant provider of end-to-end IT solutions and services encompassing comprehensive services of IT infrastructure design, implementation and lifecycle support. Continuous research and development of new services, products, processes and solutions allows your Company to enhance quality, productivity and customer satisfaction through innovation. Initiatives are being taken for development of solutions on Storage systems, Disaster Management Systems, Security, Converged Communications etc.

Your Company has established a national service network and this will help in providing support to a large base of customers. Your company is continuously evolving new business processes, modifying its existing line of activities and expanding its business capabilities to gain higher growth and market share.

DIVIDEND

Your directors do not recommend any dividend for the year ended3d1 April, 2005.

FIXED DEPOSITS

The company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

DIRECTORS

Mr. S. R. Poojari retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. During the year Mr. Sham Mishra have resigned from the Board due to pre-occupation .The Board placed on record his appreciation of the valuable services rendered by them during his tenure.

Mr. S. R. Poojari was appointed as Additional Director and requires confirmation of the Shareholders as Director. He is entitled for re appointment and retired by rotation.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement Under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors" Responsibility Statement, it is hereby confirmed:-

• That in the preparation of the annual accounts for the financial year ended 30th April, 2005 and the Application Accounting Standards had been followed along with proper explanation relating to material departures.

• That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for the year under review.

• That the Director had 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.

• That the Directors had prepared the accounts for the financial year ended 30thApril, 2005 on a going concern basis.

AUDITORS

M/s S. S. Trimbakkar & Co., Chartered Accountants, Auditors of the company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for appointment by the Company.

PERSONNEL

As there are no employees, drawing remuneration as per provisions of Section 217 (2A) of the Companies Act, 1956, and due to that, there is no requirement to submit particulars of employees as per the provisions of section 217 (2A) of the Companies Act, 1956. read with the provisions of Companies) Particulars of Employees Rules, 1975.

Conservation of Energy:

The Company's operations involve low energy consumption. However efforts to conserve and optimize the use of energy through improved operational methods and other means willcontinue.

Technology Absorption:

The Technology available and utilized is continuously being upgraded to improveoverall performance and productivity.

CORPORATEGOVERNANCE

Your Company continues to be committed to the systems of good corporate governance by increased transparency and accountability to its shareholders. Pursuant to clause 49 of the Listing Agreement with Stock exchanges, a report On Corporate Governance and Auditors certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the assistance and support extended by all Government authorities, financial institutions, banks, consultants, solicitors, shareholders and debenture holders of the company. Yours directors also wish to thank management and staff of, the promoter company, for the continuous guidance and support received from them. Your directors express their appreciation for the dedicated and sincere services rendered by employees of the company.

For and on behalf of the Board

REPORTON CORPORATE GOVERNANCE

(As required by Clause 49 of the Listing Agreement of the Stock Exchanges)

SSTL firmly believes in abiding by the Code of Corporate Governance so as to be a responsible company. The company's philosophy on corporate governances seeks the attainment of the highest levels of transparency, accountability and equity, in all facets of its operations, and in all interactions with its stakeholders, including the shareholders, employees, government and lenders. The company takes utmost care to balance individual interest with corporate goals and continues to remain committed to fairness, transparency, accountability and responsibility.

SSTL believes that all its operations and actions must serve the underlying goal of long term value creation for its shareholders and investors:

Composition: - The present strength of the Board is three Directors. Attendance of each director at the Board meetings and the last AGM conducted. Eight Board Meetings were held in 2004-2005: -

Audit Committee

Terms of Reference & Composition, Name of Members and Chairman

The Audit Committee comprises of Mr. M. V. Ramana, Chairman of the Committee, Mr.S.Pawaskar and Mr. J.S.Varshney all being Non-Executive Independent Directors. The Directors along with the Statutory Auditors are invitees to the meeting. The Terms of Reference of this Committee are wide enough covering the matters specified for Audit Committee under the Listing Agreements.

All the members of the committee are non-executive Directors having knowledge of finance, accounts and Company Law The Terms of Reference of this Committee are wide enough covering the matters specified for Audit Committee under the Listing Agreements.

The terms of reference of the Audit commitee includes:-

1. To review the company's reporting process and its financial process,

2. To review the accounting and financial policies and practices.

3. To review the efficiency of the internal control mechanism and monitor risk management policies adopted by the company and ensure compliance with regulatory guidelines.

4. To review reports furnished by the internal and statutory auditors and ensure that suitable follow up action is taken.

5. To examine Accountancy, Taxation and disclosure aspects of all significant transactions.

6. Recommending the appointment and removal of external Auditors, Fixation of Audit Fees and also approval for payment for any other services.

7. To look into the reasons of substantial defaults in the payment to the credtors

8. To seek information from any employee.

Audit Meetings and the attendance during the year.

There were five meetings of the Audit Committee during the year 200405.

Remuneration to Directors

The details of the remuneration paid to the Director, during the year 2004-2005 are given below:

NOTES:

The agreement with the Whole Time Director is for a period of one year or normal retirement date whichever is earlier. Either party to the agreement is entitled to terminate the agreement by giving not less than one-month notice in writing to the other party. Due to unavoidable reasons Mr. Sham Mishra has submitted his resignation due to preoccupation to the Board. Presently, the company does not have a schemefor grant of stock options either to the executive directors or employees.

The details of payment to Non-Executive Independent Directors during the year 2004-05 are given below: -

Investors/Shareholders Grievance Committee

The Company's Investors/Shareholders Grievance Committee has been functioning under the Chairmanship of Mr. M. V. Ramana presently.

NON-EXECUTIVE

Independent Director. The other members of the committee are Mr. M. V. Ramana, Mr.S.R. POOJARI and Mr. Sunil Pawaskar Directors of the company. Mr. M.V.Ramana, Manager is the Compliance Officer of the Company. The Company had received few complaints from the shareholders and almost all of them have been resolved by furnishing the requisite information/documents.

General Body Meetings

Details of the location of the last three AGMs and the details of the resolutions passed or to be passed by postal ballot.

19th A.G.M.:-Reo Hotel 128 The Mall.Kanpur-208001 at 11.00 a.m

The last two 18th & 17th Annual General Meetings of the company were held at Hotel Bliss, Near Gumati No.5, Gurudwara, 111-A/5.G.T.Road, Kanpur-208012 between 10.00 t o 12.00 noon and all the Meetings commenced between 10.00 a.m. to 12.00 noon. The shareholders passed all the resolutions set out in the respective notices.

Disclosures

Disclosure on materially significant related party transactions i.e. transactions of the company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the company at large.

None

Details of non-compliance by the company, penalties, strictures imposed on the company by stock exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. Except NSE/BSE due to non-compliance of some clauses, the trading was suspended and it was revoked in the year 20042005.

Annexure "A"

The distribution of shareholdings as on 30.06.2005 is as follows :-

U.P.STOCK Exchange Asso. Ltd.(Regional Stock exchange)

The trading of the equity shares of the company is suspended. The company submitted papers for the revocation of the same.

Listing Fees

The Listing fees are outstanding and same will be paid immediately after improvement of the cash flow position of the company.

Share Transfer System

The Company's shares are traded on the Stock exchanges compulsorily in Demat mode. Shares in physical mode, which are lodged for transfer at Share Transfer Agent are processed and subject to exercise of option under compulsory transfer-cum-demat procedures. All valid transfers are processed and effected normally within stipulated period as prescribed by the regulating authorities. The shareholders are given an option t o convert the shares into dematerialized form and letters to that effect are sent to all transferees. Based on their response, the share certificates are either sent to their addresses or dematerialized with intimation to the shareholders' designated Depository Participants. The entire process is, however, completed normally within a period of 30 days from the date of receipt of an application.

FINANCIAL CALENDAR (TENTATIVE) FOR RESULTS

DIVIDEND PAYMENT DATE NIL

Outstanding GDRs/Warrants or any Convertible Instruments, Conversiondate and likely impact on equity. The company has not issued any GDRs .

Warrants

The equity shares at par will be issued against the warrants on paymentas under: Nil

Equity

Lock-in period: Shares having distinctive Nos. nil are not transferable for 3 years