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    Oracle Financial Services Software Limited Annual Report 2010 - 2011


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    From the Chairman’s desk Oracle Financial Services Software has completed another stellar year. In the year under review, on a consolidated basis, we delivered a 44 percent increase in net income driven by a 21 percent increase in license revenue and a 14 percent increase in support revenue. We won several marquee customer names for our product and service offerings. Our leadership in the markets we operate in together with our focus on operational excellence has led to superior performance. Innovation is the key to our success and we have added new functionality and features to our existing products and introduced new products. New releases of Oracle FLEXCUBE added additional modules. In addition, FLEXCUBE’s existing business functionality that helps bank manage a wide range of banking activity was enriched to meet the needs of our focus countries. New releases of Oracle Financial Services Analytical Applications that address enterprise risk and enterprise performance management have helped us gain new customers and momentum. Oracle’s Liquidity Risk Management solution helps financial institutions identify and assess enterprise-wide liquidity risk under normal and extreme market conditions, and develop strategies to effectively bridge liquidity gaps. Oracle Financial Services Data Warehouse is designed to specifically address the complex and cross-functional analytical challenges of global financial institutions. Oracle’s Energy and Commodity Trading Compliance solution automates the surveillance of the trading activity of energy and commodities market participants. Our products and services continue to win industry accolades and recognition. Leading research and advisory firm, Celent, has named Oracle a leader in core banking sales for 2010. Operational Risk & Regulation (formerly OpRisk & Compliance) readers once again ranked Oracle Financial Services Software as a leader for compliance software based on the publication’s 2010 Annual Compliance Software Survey. The publication’s readers named Oracle (including Sun) as a leading vendor across seven of the survey’s eight compliance software categories. No other vendor achieved this distinction in the 2010 survey. Oracle Financial Services Software Limited customers, Jibun Bank and United Bank Limited Pakistan, were honoured with 2010 Model Bank Awards from industry analyst firm Celent. Though the global economy is on a firmer footing than it was that in 2008 and 2009, financial institutions are all too aware of the need to align their management of finance and risk. A recent study conducted by the Economist Intelligence Unit (EIU) and sponsored by Oracle Financial Services titled “Transforming the CFO Role in Financial Institutions: Towards Better Alignment of Risk, Finance and Performance Management” found a positive correlation between greater alignment of risk and finance functions and financial performance in financial institutions. Also, several studies have confirmed that because of their fragmented IT infrastructure many banks were not able to track their overall risk exposure prior to and during the downturn. Regulatory authorities are now demanding that banks rectify these gaps and we are uniquely placed to help banks confront these challenges. The opportunities are exciting and we look forward to another rewarding year at Oracle Financial Services Software. Our employees are our major asset. Their commitment to our mission and to our customer’s success has been the reason for our Company’s performance. Regards, William T Comfort, Jr. Chairman Oracle Financial Services Software Limited


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    This page has been intentionally left blank. Oracle Financial Services Software – Annual Report 2010-2011


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    Contents Financials at a Glance 4 Corporate Information 6 Directors’ Report 9 Corporate Governance Report 16 Financials Indian GAAP – Unconsolidated 33 – Consolidated 85 Annual General Meeting Notice 129 Attendance Slip & Proxy Form 143 3


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    Financials at a glance Key performance indicators 2010 – 2011 As per Indian GAAP Consolidated results Fiscal year 2010 – 2011 break up in terms of operating revenue by region, operating revenue by portfolio and expense by category Latin America and BPO Services Middle East, India Caribbean 3% 2% and Africa 15% USA 31% Services 31% Products Asia Pacific 67% 25% Europe 26% Operating revenue by region Operating revenue by portfolio Other expenses 10% Facility costs 3% Professional fees 9% Travel cost 8% Staff cost 70% Expense by category (All figures in ` millions except EPS & Book Value) Our 10 years in the industry 2001‑02 2002‑03 2003‑04 2004‑05 2005‑06 2006‑07 2007‑08 2008‑09 2009‑10 2010‑11 Operating Revenue 4,157.18 6,141.21 7,881.29 11,385.93 14,823.00 20,609.38 23,802.36 29,276.20 28,739.74 29,969.32 Interest and Other Income (expense) 138.09 97.93 136.58 259.28 290.54 367.28 631.16 1,763.89 (858.03) 1,668.26 Total Revenue 4,295.27 6,239.14 8,017.87 11,645.21 15,113.54 20,976.66 24,433.52 31,040.09 27,881.71 31,637.58 Total Expenses 2,991.95 4,277.53 5,703.26 8,693.82 12,176.60 16,837.91 19,835.95 22,839.30 18,947.38 19,157.57 EBT 1,303.32 1,961.61 2,314.61 2,951.39 2,936.94 4,138.75 4,597.57 8,200.79 8,934.33 12,480.01 Tax 150.33 252.73 526.75 627.06 560.41 415.95 441.68 835.36 1,197.69 1,370.12 EAT 1,152.99 1,708.88 1,787.86 2,324.33 2,376.53 3,722.80 4,155.89 7,365.43 7,736.64 11,109.89 EPS 13.74 20.37 21.31 27.71 28.33 44.37 49.54 87.79 92.22 132.43 Book Value 56.17 92.12 111.20 136.52 164.45 281.53 331.01 417.77 511.31 644.34 Note: All EPS and Book Values are computed based on the current equity capital base of 83,894,802 shares as on March 31, 2011. Oracle Financial Services Software – Annual Report 2010-2011


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    Key metrics 2001 – 2011 Operating revenue Net income 29,276.20 29,969.32 12,000.00 30,000.00 28,739.74 11,109.89 10,500.00 25,000.00 23,802.36 9,000.00 20,609.38 7,736.64 in ` million 7,365.43 20,000.00 in ` million 7,500.00 14,823.00 6,000.00 15,000.00 11,385.93 4,155.89 4,500.00 3,722.80 10,000.00 7,881.29 6,141.21 3,000.00 2,324.33 2,376.53 1,708.88 1,787.86 4,157.18 5,000.00 1,500.00 1,152.99 0.00 0.00 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Economic Value Added Earnings Per Share 4,500.00 4,215.93 140.00 132.43 4,000.00 120.00 3,500.00 3,000.00 2,859.79 100.00 92.22 87.79 in ` million 2,500.00 2,335.05 80.00 in ` 2,000.00 60.00 49.54 1,500.00 1,294.00 44.37 1,149.83 903.50 911.58 40.00 1,000.00 27.71 28.33 669.33 720.91 21.31 20.37 472.33 500.00 20.00 13.74 0.00 0.00 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Earnings per share is computed on the equity capital base of 83,894,802 shares as on March 31, 2011 Book value Number of employees including subsidiaries 700.00 644.34 12,000 11,006 11,386 10,451 600.00 10,000 9,652 9,068 511.31 Number of Employees 500.00 417.77 8,000 6,858 400.00 in ` 331.01 6,000 300.00 281.53 4,747 4,000 2,974 200.00 164.45 136.52 2,327 111.20 2,032 92.12 2,000 100.00 56.17 0.00 0 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Book Value is computed on the equity capital base of 83,894,802 shares as on March 31, 2011 Customers serviced Country presence 1,000 971 150 922 137 137 139 133 882 128 123 814 800 753 120 108 112 Number of Customers 642 93 Country Base 90 84 600 544 480 404 400 345 60 200 30 0 0 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 5


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    Corporate information Oracle Financial Services Software Board of Directors Loganathan Damodaran Company Secretary Chaitanya Kamat M Ravikumar Hoshi D Bhagwagar (Managing Director and CEO) Madhukar Harbanslal Kapoor Derek H Williams Mahesh Rao Chief Financial Officer Dorian Daley Manmath Kulkarni Makarand Padalkar Frank Brienzi Manoj Narayan Kulkarni Robert K Weiler Meenakshy Iyer Chief Accounting Officer S Venkatachalam Mini S Muralidhar Avadhut (Vinay) Ketkar William Corey West Mustafa Moonim William T Comfort, Jr. (Chairman) Naveen Grover Solicitors Y M Kale Nikos G Goutsoulas Ramesh P Makhija & Co. P Suresh Kumar Senior Management Patrick T O’Laughlin Auditors A Srinivasan Peter Martin Hill S. R. Batliboi & Associates Abhik Ray Pradeep Godbole Anand Pitre Rajendra Potdar Bankers Atul Gupta Rajesh Makhija Bank of India Bhaskar Jayaraman Ravi Pandit Canara Bank Buddhadeb Das Gupta Ravikumar V Central Bank of Libya Chandrasekaran Balsubramanian Salmon Seth P Citibank N.A. Dinakar Kuntadi Kini Sanjay Bajaj HDFC Bank Ltd. Dinesh Shetty Sanjay V Deshpande Kotak Mahindra Bank Ltd. Don Ganguly Sanjeet Prakash Rao Syndicate Bank G Narasimhan Sivaramakrishnan G State Bank of Mauritius Ltd. Ganesh Ramakrishnan Sridhar Ramachandran Yes Bank Ltd. George Thomas Sunder Annamraju Girish Chhatpar Surendra Shukla Registrars & Transfer Agents Gulhati Arvind Tejus Sheth Link Intime India Private Limited H S Teji Uttam Gadkary C/13 Pannalal Silk Mills Compound Jambu Natarajan V Srivatsan L.B.S. Road, Bhandup (West) K Kochappan Davis Venkata Subramanian Mumbai 400078 K Sanjay Iyer Vijay Alexander K Surya Vijay Sharma Karthick R Prasad Vikram Gupta Kiran Narsu Vinayak Hampihallikar Kishore Kapoor Vivek Govilkar Laura Balachandran Oracle Financial Services Software – Annual Report 2010-2011


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    Registered Office Subsidiary Offices – India Oracle Financial Services Software Limited Oracle (OFSS) ASP Private Limited Oracle Park Oracle Park Off Western Express Highway Off Western Express Highway Goregaon (East) Goregaon (East) Mumbai 400063 Maharashtra, India Mumbai 400063 Maharashtra, India Offices Oracle (OFSS) Processing Services Limited 399, Subhash Road 399, Subhash Road Vile Parle (East) Vile Parle (East) Mumbai 400057 Maharashtra, India Mumbai 400057 Maharashtra, India SDF-1, Unit 10, 11 & 12 Nirlon Compound SEEPZ - SEZ Off Western Express Highway Andheri (East) Goregaon (East) Mumbai 400096 Maharashtra, India Mumbai 400063 Maharashtra, India Block A, NR Enclave, 4th Floor Oracle Park Plot No. 1, EPIP Industrial Area Ambrosia Village limits of Hoodi Pune 411021 Maharashtra, India Krishnarajapuram Hobli Whitefield Embassy Business Park Bangalore 560066 Karnataka, India C.V. Raman Nagar Bangalore 560093 Karnataka, India Oracle Financial Services Software Chile Limitada Avenida del Valle 537 - 3rd Floor #333, Millenium Tower Ciudad Empresarial Brookefields Huechuraba Kundalahalli Road Santiago, Chile, CP 8580678 Mahadevapura Bangalore 560037 Karnataka, India Subsidiary Offices – Asia Pacific #150, Diamond District B Tower, Lower Ground Floor Oracle Financial Services Software (Shanghai) Limited Kodihalli, Airport Road Unit 806 in Henderson Metropolitan Bangalore 560008 Karnataka, India 155 Tianjin Road Shanghai, PRC, China 2000001 SJR I Park Ground & First floor, Tower 2 Oracle Financial Services Software Pte. Ltd. EPIP Zone, Whitefield Road, Whitefield 27, International Business Park Bangalore 560066 Karnataka, India #02-01 iQUEST@IBP Building Singapore 609924 Gopalan Enterprises (I) Pvt. Ltd., (SEZ) Global Axis, Unit 1&2 Offices Plot # 152, EPIP Zone Whitefield 21st Floor, Office Park Tower C Bangalore 560066 Karnataka, India No-5, Jing Hua Nan Jie Chaoyang District 99, Venkatnarayana Road Beijing 100020, China T Nagar Chennai 600017 Tamil Nadu, India Oracle Aoyama Center 3F 2-5-8 Kita Aoyama Greens i-tech, # 5 Minato-ku Muthiah Mudali Street Tokyo 107-0061, Japan Off Cathedral Road Chennai 600086 Tamil Nadu, India Sunhwa Building 14F, 5-2 Sunhwa-dong 18 Krasnopresnenskaya nab. Jung-gu Block C, 9th floor Seoul, South Korea Moscow 123317, Russia 12, 16, 36F ASEM Tower Building No. 03 Samsung-dong, Kangnam-Gu 128, 1st floor Seoul, South Korea 135090 205, 207, 2nd floor Dubai Internet City 35F, No. 66, Sec. 1 P.O. Box: 500053, Dubai, UAE Chung Hsiao W. Rd. Taipei 10018, Taiwan, R.O.C 5th Floor, Middle East Bank House Milimani Road 39/F The Lee Gardens Nairobi, Kenya 33 Hysan Avenue Causeway Bay, Hong Kong 7


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    19/F Pacific Star Building Subsidiary Offices – North America Sen. Gil Puyat corner Makati Avenue Makati City, Philippines Oracle Financial Services Software America, Inc. Oracle Financial Services Software, Inc. & Mantas Inc. Level 23, The gardens North Tower 399 Thornall Street, 6th Floor Mid Valley City Edison, NJ 08837 USA Lingkaran Syed Putra Kuala Lumpur 59200, Malaysia Offices Level 10, Margaret Street 8000 Norman Center Drive, Suite 700 Sydney, NSW 2000, Australia Bloomington, MN 55437 USA Level 4, 4 Julius Avenue 1900 Oracle Way, 3rd Floor North Ryde Reston, VA 20190 USA Sydney, NSW 2113, Australia 1250 Hancock Street, Suite 603N Oracle Financial Services Consulting Pte. Ltd. Quincy, MA 02169 USA (subsidiary of Oracle Financial Services Software Pte. Ltd.) 27, International Business Park 6505 Blue Lagoon Drive, Suite #400 #04-05 iQUEST@IBP Building Miami, FL 33126 USA Singapore 609924 Oracle Financial Services Software, Inc. Subsidiary Office - Europe 9 East 37th Street New York, NY 10016 Oracle Financial Services Software B.V. USA Claude Debussylaan 32 14th floor/Vinoly Building Oracle Broomfield 1082 MD Amsterdam, The Netherlands Building 7, Basement Section K, Row I 500 Eldorado Blvd Offices Broomfield, Co 80028 Mainzer Landstrasse 49a 17901 Von Karman 60329 Frankfurt am Main, Germany Suite 800 Irvine, CA 92614 121, Meridian Place Off Marsh Wall, South Quay 151 Yonge Street, Suite 600 London E14 9FE, UK Toronto, ON, M5C 2W7, Canada Level 25 Subsidiary Office – Mauritius 40 Bank Street, Canary Wharf London E14 5NR, UK ISP Internet (Mauritius) Company Limited C/o Cim Global Business Molyneux House Rogers House Bride Street 5 President John Kennedy Street Dublin 8, Ireland Port Louis, Mauritius Eastpoint Business Park Offices Fairview Dublin 3, Ireland Oracle (OFSS) BPO Services Inc. 17682, Mitchell North, Suite 201 Suite 22 Irvine, CA 92614 USA Portes de la Defense 15, boulevard Charles de Gaulle Oracle (OFSS) BPO Services Limited 92700 Colombes, France A-16/9, Poorvi Marg Vasant Vihar Subsidiary Office - Greece New Delhi 110057, India Oracle Financial Services Software SA DLF Infinity Tower A, 3rd Floor 6-8 Kifisias Avenue DLF Cyber City, Phase II 151 25 Marousi Gurgaon 122002 Haryana, India Athens, Greece Oracle Financial Services Software – Annual Report 2010-2011


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    Directors’ report Financial year 2010-2011 Dear Members, The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements for the financial year 2010 – 2011. Financial highlights As per Indian GAAP Unconsolidated financial statements: (All amounts in ` millions) Particulars Year ended Year ended March 31, 2011 March 31, 2010 Revenue 23,605.06 22,434.70 Income from operations before depreciation & amortisation 9,302.76 8,530.50 Depreciation & amortisation (336.49) (374.10) Provision for diminution in value of investment (25.42) – Interest/other income (expenses), net 1,383.95 681.02 Foreign exchange gain/(loss), net 19.07 (1,363.74) Income before taxes 10,343.87 7,473.68 Provision for tax (664.07) (865.19) Net income 9,679.80 6,608.49 Balance brought forward 21,683.92 15,075.43 Profit available for appropriation 31,363.72 21,683.92 Appropriations – – Balance carried forward 31,363.72 21,683.92 As per Indian GAAP Consolidated financial statements: (All amounts in ` millions) Particulars Year ended Year ended March 31, 2011 March 31, 2010 Revenue 29,969.32 28,739.74 Income from operations before depreciation & amortisation 11,219.92 10,281.02 Depreciation & amortisation (408.17) (488.65) Impairment loss – – Interest/other income (expenses) 1,668.26 (856.17) Exceptional item – – Income before taxes 12,480.01 8,936.20 Provision for tax (1,370.12) (1,197.69) Net income for the year before minority interest, share of profit (loss) of associate 11,109.89 7,738.51 Minority interest – (1.87) Share of profit (loss) of associate – – Net income 11,109.89 7,736.64 Performance On an unconsolidated basis, your Company’s revenue grew to ` 23,605 million during the financial year 2010 – 2011 from ` 22,435 million last year. This represents a growth of 5.22%. The Company’s net income for the financial year 2010 – 2011 has increased to ` 9,680 million, an increase of 46.49% over the previous financial year. Revenue, on the basis of consolidated financials, stood at ` 29,969 million this year, an increase of 4.28% from ` 28,740 million as compared to the previous financial year. The net income increased to ` 11,110 million this year, an increase of 43.60%. A detailed analysis of the financials is given in the Management’s discussion and analysis report that forms a part of this Directors’ report. Dividend Your Company has plans to capitalise on the opportunities emerging from current market conditions and needs to invest in business growth. Keeping this in view, the Board has decided not to declare dividend for the financial year 2010 – 2011. The funds will be used to further invest in new product development, infrastructure expansion and other growth opportunities to enhance the solution offerings, market reach and delivery capabilities and sustain the leadership position of your Company. 9


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    Transfer to reserves The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation. An amount of ` 31,363.72 million is proposed to be retained in the Profit & Loss Account. Share capital During the year, the Company allotted 39,945 equity shares of face value of ` 5/- each to its eligible employees, who exercised their options under the Employee Stock Option Scheme 2002. As a result, as on March 31, 2011, the paid-up equity share capital of the Company increased to ` 419,474,010/- divided into 83,894,802 equity shares of face value of ` 5/- each. Oracle’s holding in the Company As on March 31, 2011, Oracle Global (Mauritius) Limited held 67,481,698 equity shares (80.44% of the equity capital) of the Company. Directors Mr. Derek H Williams and Mr. William T Comfort, Jr., Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Ms. Dorian Daley is liable to retire by rotation at the ensuing Annual General Meeting and has not offered herself for re-appointment. Pursuant to Section 260 of the Companies Act, 1956, Mr. Chaitanya Kamat and Mr. S Venkatachalam, were appointed as Additional Directors of the Company on October 25, 2010. Mr. Robert K Weiler, Executive Vice President of Oracle Corporation was appointed as Additional Director of the Company on July 4, 2011. They hold office up to the date of the ensuing Annual General Meeting. The Company has received Notices in writing from Members, pursuant to Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Chaitanya Kamat, Mr. S Venkatachalam and Mr. Robert K Weiler for the office of a Director. Pursuant to the provisions of Sections 198, 269, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956, the Board subject to the approval of the members appointed Mr. Chaitanya Kamat as the Managing Director and Chief Executive Officer of the Company for a period of three years beginning from October 25, 2010 to October 24, 2013. Mr. Chaitanya Kamat shall be liable to retire by rotation. As stipulated under Clause 49 of the Listing Agreement entered into with the stock exchanges, brief resumes of the Directors proposed to be appointed/re-appointed, the nature of their expertise in specific functional areas and the names of companies in which they hold directorships and membership/chairmanship of Board Committees, are provided in the Report on Corporate Governance forming a part of the Annual Report. The Board recommends to the members the resolutions for re-appointment of Mr. Derek H Williams and Mr. William T Comfort, Jr. as Directors of the Company. The Board also recommends the appointment of Mr. Chaitanya Kamat, Mr. S Venkatachalam and Mr. Robert K Weiler as Directors. It further recommends the appointment and remuneration payable to Mr. Chaitanya Kamat, Managing Director and Chief Executive Officer of the Company. During the year, the following ceased to be directors of the Company: • Mr. Rajesh Hukku and Mr. R Ravisankar w.e.f. April 29, 2010 • Mr. Charles Phillips w.e.f. July 22, 2010 • Ms. Tarjani Vakil w.e.f. August 25, 2010 • Mr. N R Kothandaraman (N R K Raman) w.e.f. October 25, 2010 • Mr. Joseph John w.e.f. March 31, 2011. The Board placed on record its appreciation of the services rendered by Mr. Rajesh Hukku, Mr. R Ravisankar, Mr. Charles Phillips, Ms. Tarjani Vakil, Mr. N R K Raman and Mr. Joseph John, during their tenure as Directors of the Company. Infrastructure The Board has adopted a consolidation plan to save cost and use the premises more efficiently. As such, the leases on the following office premises were surrendered and staff relocated: • Mumbai: the office premises at Andheri and staff relocated to the Vile Parle office premises • Pune: the office premises at Kothrud and staff relocated to the Ambrosia owned premises • Bangalore: the office premises at RMZ NXT and staff relocated to the Millenium Tower office premises • Chennai: the office premises at Nungambakkam and staff relocated to the GVS office premises. Oracle Financial Services Software – Annual Report 2010-2011


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    Corporate developments During the year, the following developments took place on the subsidiary front: • Castek Inc., Castek Software Factory Ltd. and Castek RBG Inc., dissolved with effect from September 1, 2010 • The name of i‑flex Processing Services Inc., was changed to Oracle (OFSS) BPO Services Inc., with effect from February 22, 2011 • i‑flex solutions Inc. (Canada) dissolved with effect from March 31, 2011. Global alliances Your Company attaches great importance to building and expanding its partner network with organisations which can promote, sell, implement and support its offerings around the world. The partner network currently comprises more than 35 resellers and 45 implementation partners. Leading System Integration (SI) Partners play an active role in delivering solutions to customers of your Company. The SI Partners deliver projects in the Confederation of Independent States, Latin America, Middle East, Japan and India. The highlight of our engagement with partners this year has been the acceleration of our efforts to enable our partners to sell, implement and support our product suite – including Oracle FLEXCUBE and Oracle Financial Services Analytical Applications. We have also begun the migration of your Company’s partner network to the Oracle Partner Network (OPN) in earnest. This migration will speed the enablement of partners, leverage existing Oracle relationships to promote growth, and benefit both sides of the partner relationship. Subsidiaries Your Company has subsidiaries in India, USA, Singapore, the Netherlands, Canada, Mauritius, Greece, China and Chile to handle operations, strengthen marketing and sales efforts, ensure deeper sales penetration and provide post-sales support in these regions. Pursuant to Section 212 of the Companies Act, 1956 (“the Act”), the Company is required to attach to its Annual Report, the Balance Sheet, Profit and Loss Account, Directors’ Report and the Report of the Auditors (collectively referred to as ‘the accounts and reports’), of its subsidiaries for the year ended March 31, 2011. The Ministry of Corporate Affairs has issued a General Circular No.: 2/2011 dated February 8, 2011 granting a general exemption to the companies by stating that the provisions of Section 212 of the Act shall not apply in relation to subsidiaries of companies subject to the company fulfilling certain conditions stated in the said circular. We are in compliance with the conditions stipulated by the Ministry of Corporate Affairs. As such, the accounts and related reports of the subsidiary companies are not attached to the Annual Report of the Company for the year ended March 31, 2011. The Company will make available the accounts and related information of the subsidiary companies upon request by any member/investor of the Company or its subsidiaries. Further, the accounts and related information of the subsidiary companies will be kept open for inspection by any member, at the registered office of the Company and at the Registered Office of the subsidiaries during office hours of the Company/subsidiaries and the same will also be available on the website of the Company www.oracle.com/financialservices. Fixed deposits During the financial year 2010 – 2011, the Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet. Corporate governance The Company has taken appropriate steps and measures to comply with all the corporate governance and related requirements as envisaged under Clause 49 of the listing agreement entered with stock exchanges and Section 292A of the Companies Act, 1956. Your Company has constituted five committees consisting of Board members and other senior officials of the Company, namely, an Audit Committee, Compensation Committee, ESOP Allotment Committee, Transfer Committee and Shareholders’ Grievances Committee. A separate report on Corporate Governance, along with a certificate of Statutory Auditors of the Company, is annexed herewith. The Company is also supporting the Go Green initiative announced by the Ministry of Corporate Affairs allowing paperless compliance. A certificate from the Managing Director and Chief Financial Officer of the Company confirming internal controls and checks pertaining to financial statements, as also declaring that all Board members and senior management personnel have affirmed compliance with the Code of Conduct for the financial year ended March 31, 2011, was placed before the Board of Directors and the Board has noted the same. The said certificate is annexed to the Directors’ report. A list of the committees of the Board, names of their members, scope and other related information are detailed in the Corporate Governance Report. 11


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    Allotment of ESOP shares The members of the Company at its Annual General Meeting held in 2001 had approved the issue of Stock Options to eligible employees/directors. Accordingly, the Board approved the ESOP 2002 and ESOP 2010 Schemes and granted options to eligible employees/directors from time to time. The details are given below: Financial year Total number of Options granted Under ESOP 2002 Scheme 2001 – 2002 4,548,920 2002 – 2003 80,000 2003 – 2004 36,000 2004 – 2005 60,000 2005 – 2006 10,000 2006 – 2007 373,000 2007 – 2008 Nil 2008 – 2009 Nil 2009 – 2010 Nil 2010 – 2011 60,000 Under ESOP 2010 Scheme 2010 – 2011 618,000 Total 5,785,920 Pricing formula At the market price as on the date of grant Options vested at the end of the financial year 2010 – 2011 141,537 Options exercised during 2010 – 2011 39,945 Total number of shares arising as a result of exercise of options during 2010 – 2011 39,945 Options lapsed 2002 – 2003 129,520 2003 – 2004 112,500 2004 – 2005 82,200 2005 – 2006 87,600 2006 – 2007 46,600 2007 – 2008 35,900 2008 – 2009 60,455 2009 – 2010 21,000 2010 – 2011 72,735 Total 648,510 Variation of terms of options None Money realised by exercise of options during the financial year 2010 – 2011 ` 50,126,813 Total number of options in force 807,702 Employee-wise details of options granted during the financial year ended March 31, 2011 to: Particulars Number of Options i. Directors Mr. Chaitanya Kamat – ESOP 2002 60,000 Mr. Joseph John – ESOP 2010 10,600 ii. Any other employee, who receives grant in any one year of option amounting to 5% or more of option granted during that year Nil iii. Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil iv. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with accounting standard 20 ‘Earnings Per Share’ issued by the Institute of Chartered Accountants of India ` 115.23 Had compensation cost for the Company’s ESOP been determined based on fair value at the grant dates, Company’s net profit and earnings per share would have been reduced to proforma amounts indicated below: (All amounts in ` thousands, except per share data) Particulars March 31, 2011 Profit as reported 9,679,797 Less: Employee stock compensation under fair value method (132,716) Proforma profit 9,547,081 Earnings Per Share Basic As reported 115.40 Proforma 113.82 Diluted As reported 115.23 Proforma 113.68 All stock options under the Employee Stock Options Plans were granted at a prevalent market price on the date of grant. Accordingly, we have calculated the compensation cost arising on account of stock options granted using the intrinsic value method. Hence, the Oracle Financial Services Software – Annual Report 2010-2011


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    disclosure in terms of Clause 12.1(n) of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is not applicable. A summary of the activity in the Company’s ESOP (Scheme 2002) is as follows: Year ended March 31, 2011 Particulars Shares arising Weighted average from options exercise price (`) Outstanding at beginning of year 242,382 1,152 Granted 60,000 2,333 Exercised (39,945) 1,255 Forfeited (16,600) 1,291 Outstanding at end of the year 245,837 1,414 Vested options 141,537 Unvested options 104,300 A summary of the activity in the Company’s ESOP (Scheme 2010) is as follows: Year ended March 31, 2011 Particulars Shares arising Weighted average from options exercise price (`) Outstanding at beginning of year – – Granted 618,000 2,050 Exercised – – Forfeited (56,135) 2,050 Outstanding at end of the year 561,865 2,050 Unvested options 561,865 The fair value of stock options granted during the financial year 2010 – 2011 under ESOP 2002 Scheme and ESOP 2010 Scheme was ` 949.32 and ` 834.01 respectively, calculated as per the Black Scholes valuation model as stated in 6b in the notes to accounts. Human resources Employees are our key assets and we continuously invest in them to retain our competitive edge. We have created a healthy and productive environment, together with a strong performance management system, to encourage excellence. Our HR practices are among the best in the industry. Our training initiative offers the best and latest in technology, domain expertise and leadership. This was a year spent in the consolidation of our resources. Your Company continued to focus on productivity. Our total manpower at the end of March 2011 was 9,652 as compared to 10,451 as on March 2010. Corporate Social Responsibility An initiative to support children, originally rolled out as “i-flex for children”, is in its ninth successful year. Our Corporate Social Responsibilities are managed by a committee of senior company officials and volunteers from divisions and locations in India. Our policy is to support activities which do not have any religious or political affiliation. Your Company encourages employees to actively participate in and drive such programs. We also support initiatives by our employees and their family members in rural India. The initiative is funded each year to support activities proposed to the committee by employees. Continuing support was given to a wide range of activities during fiscal year 2010 – 2011, including construction of additional facilities at schools and hospitals, scholarships for children with special needs and making transportation arrangements for special need schools. For the past 5 years your Company has supported an annual athletic event for children. Directors’ responsibility statement As required under Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that: i. In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv. The Directors have prepared the annual accounts on a ‘going concern’ basis. 13


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    Auditors M/s. S. R. Batliboi & Associates, Chartered Accountants, the present Statutory Auditors of the Company, hold office till the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office, if re-appointed. Auditors’ Report With regard to the Auditors’ comment in the CARO report concerning delays in payment of a few tax payments, e.g., Service Tax, Income Tax, Value Added Tax, Payroll Tax, the Company would like to state the following: i. The Company has sought help of tax experts in the interpretation of laws and regulations relating to corporate taxes and VAT in foreign countries. The Company has accrued the liabilities in the books taking a conservative approach, however the payments shall be made to the authorities in due course based on the final advice your Company receives from tax experts. ii. The Company has accrued interest on service tax liability for import of taxable services as well as the domestic taxable services. The amount shall be paid in due course. iii. The Company continually assesses payroll tax implications in various jurisdictions outside India on salaries and travel related reimbursements paid to its employees posted therein and accordingly makes accruals in the books. The Company is in the process of filing the returns for payroll tax in such jurisdiction for which the provision is already made in the books. As per the local laws of most host countries, the tax is payable by the employee, however in a few countries tax payment is a responsibility of the employer, which amounts to ` 4.87 crore. The Company and the employees ensure tax compliance in such countries as advised by the tax consultants. iv. The amount of Income Tax payable is due to retrospective amendment to Section 115JB of the Income Tax Act, 1961, and it will be paid during assessment proceedings. Conservation of energy, technology absorption and Foreign exchange earnings and outgo The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder: i. Conservation of energy and technology absorption: The company seeks, through various technology initiatives, to enhance computing standards to make its information technology infrastructure virtual, secure, cost effective and environment friendly. It seeks to provide its users with enhanced computing systems and also fulfil its obligation to the society and the environment. Asset Disposal: Asset Management and disposal of old assets has been one of the key initiatives of the year. The disposal of old assets was done, keeping in mind e-waste and its impact on the environment. The disposal was done in accordance with the government guidelines, ensuring that the assets are disposed in a secure manner, without impacting the environment. Virtualisation: The benefits of virtualisation started accruing during the first year of implementation. The key strategy for the previous year was to optimise the benefits from the implementation. Virtualised environments were extended from IT operations to client projects, leading to reduction in overall cost and power consumption. This has also enhanced client operations from an availability and security perspective as well. Office consolidation: On strategic analysis, it was observed that there was a lot of duplication of effort and technology in managing IT operations. Our focus shifted from technology advancement to ensuring that this duplication did not lead to non-standardisation of services to users. Therefore we decided on office consolidation and Pune is the first location to have achieved it in record time and without any setbacks. This consolidation has enabled greater utilisation of human effort as well as provided a platform for effective technology management. This has reduced operating cost by one third due to reduction in power consumption. This will be replicated across all locations as part of the strategy for FY12. The Datacentres at the new offices are designed to optimise on power consumption and also incorporate environmentally friendly systems such as high end gas suppression systems and early smoke detection systems. Overall the efforts at Oracle are to optimise performance, minimise costs and balance them keeping in mind our accountability to the environment as well. ii. Foreign exchange earnings and outgo: (All amounts in ` millions) Foreign Exchange Earnings* 22,666.87 Foreign Exchange Outgo 6,462.92 (Including capital goods & other expenditure) * Excluding reimbursement of travelling expenses and interest income. Oracle Financial Services Software – Annual Report 2010-2011


  • Page 17

    Prospects The challenges various economies faced over the past 12 months are very different from those they faced during the economic turbulence in 2008. OECD forecasts (May 25, 2011) suggest that global GDP will grow by 4.2% this year. But the rate of growth in various countries varies and some countries face a challenge with rising unemployment. In the financial services sector managing risk, liquidity, capital and performance remain at the top of the agenda for both banks and insurance companies. Governments and regulators are expected to discuss and introduce a whole new set of regulations during 2011. That could lead to changes in the way business operations are handled in most financial institutions. Financial institutions are under pressure to achieve cost savings and information technology provides them the scope for continuous productivity increases while helping them differentiate their products and services. Over the past year, your Company has enriched its banking back office offering, Oracle FLEXCUBE, to address many of these business opportunities; this has led to our customers using it to deliver a direct bank or consolidate their operations across countries in a region. We have also engaged with existing Oracle banking customers to sign up as a partner for their operations addressing expansion to a new geography or new businesses like wealth management. Since 2008, the boards at financial institutions have come to pay greater attention to the process they use to review the performance of their institutions. As a result, there has been wider adoption of Risk Adjusted Performance Measurement. Over the last 24 months your Company has invested in building and delivering critical components that are part of the Oracle Financial Services Analytical Applications suite. Oracle is now one of the leading players in this space with the ability to deliver applications to financial institutions for compliance, enterprise risk, liquidity, capital management, performance management and customer analytics. In a drive to boost efficiency in an increasingly complex global financial marketplace, leading global banks have embarked on the integration of their finance, risk and treasury operations. Oracle has relationships with many of these banks who use enterprise financial applications, financial planning applications and or business intelligence applications from Oracle’s portfolio. We have now engaged with these banks to encourage them to use Oracle Financial Services Analytical Applications to support business decisions and drive efficiency through a consistent set of data and metrics. To protect customers, regulators in Africa, Asia and South America have made changes in their regulations with regard to Fraud and Financial Crime. The increasing sophistication of fraudulent activity continues to force financial institutions to be continuously on their guard. Your Company has evolved Mantas, which was acquired in 2006, to automate the surveillance of the trading activity of energy and commodities market participants and for compliance for trading desks and brokers in the leading economies. Oracle’s integrated applications and technology suite combines applications, middleware, database, servers and storage. It is now enabling your Company to leverage customer engagements for transformation deals at banks and also differentiate its solution offering in the market place. Consulting Services continue to play a key and vital role for your Company and performs a very strategic role in its customer engagements. Leading banks have signed deals that include services from your Company along with the application licenses. Support services for our applications continue to grow and banks see this service as vital for operations at their banks. Employee particulars Information as per Section 217(2A) of the Companies Act, 1956 (“the Act”), read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Directors’ Report and the Accounts are being sent to the members excluding the statement giving particulars of employees under Section 217(2A) of the Act. Any member interested in obtaining a copy of the statement, may write to the Company Secretary at the Registered Office of the Company. Acknowledgements Your Directors take this opportunity to thank the Company’s customers, members, vendors and bankers for their continued support during the year. Your Directors also wish to thank the Government of India and its various agencies, Department of Electronics, the Software Technology Parks – Bangalore, Mumbai, Chennai and Pune, SEEPZ Special Economic Zone, the Customs and Excise Department, Ministry of Commerce, Ministry of Finance, Ministry of External Affairs, Ministry of Corporate Affairs, Department of Telecommunication, the Reserve Bank of India, the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu and other local Government Bodies, for their support and look forward to their continued support in the future. Your Directors also place on record their appreciation for the excellent contribution made by employees of the Company through their commitment, competence, co-operation and diligence with a view to achieving consistent growth for the Company. For and on behalf of the Board William T Comfort, Jr. Chairman July 15, 2011 15


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    Corporate governance report The detailed report on Corporate Governance of Oracle Financial Services Software Limited for the financial year ended 2010 – 2011 as per Clause 49 of the Listing Agreement entered with Stock Exchanges is set out below. 1. Company’s philosophy on code of governance The Company believes in adopting and adhering to globally recognised corporate governance practices and continuously benchmarking itself against such practices. The Company understands and respects its fiduciary role and responsibility to its members and strives to meet their expectations. 2. Board of Directors 2.1 Composition and category The composition of the Board of Directors of the Company (“the Board”) as on March 31, 2011, was as under: Name of the Director Designation Category Directorships Chairmanship Membership in other of Committees* of Committees* Companies of Boards of Boards of other of other Companies Companies Mr. William T Comfort, Jr. Chairman Non-Executive, Independent Director 5 Nil Nil Mr. Frank Brienzi1 Director Non-Executive, Non- Independent Director 2 Nil Nil Ms. Dorian Daley Director Non-Executive, Non- Independent Director 22 Nil Nil Mr. Joseph John2 Director Executive, Non- Independent Director Nil Nil Nil Mr. Y M Kale Director Non-Executive, Independent Director 4 Nil Nil Mr. Chaitanya Kamat3 Director Executive, Non- Independent Director Nil Nil Nil Mr. S Venkatachalam4 Director Non-Executive, Independent Director 2 1 2 Mr. William Corey West5 Director Non-Executive, Non- Independent Director 19 Nil Nil Mr. Derek H Williams Director Non-Executive, Non- Independent Director 1 1 Nil * Only the Audit Committee and Shareholders’ Grievances Committee are considered. All Directorships of Mr. William T Comfort, Jr., Mr. Frank Brienzi, Ms. Dorian Daley, Mr. William Corey West and Mr. Derek H Williams are in foreign companies. None of the directors are related inter se. 1 Mr. Frank Brienzi was appointed as a Director in the Annual General Meeting held on August 25, 2010. 2 Mr. Joseph John was appointed as a Director and Whole-time Director in the Annual General Meeting held on August 25, 2010. He ceased to be a director with effect from March 31, 2011. 3 Mr. Chaitanya Kamat was appointed as an Additional Director and as the Managing Director and CEO with effect from October 25, 2010 subject to the approval of the members of the Company. 4 Mr. S Venkatachalam was appointed as an Additional Director with effect from October 25, 2010. 5 Mr. William Corey West was appointed as a Director in the Annual General Meeting held on August 25, 2010. Mr. Robert K Weiler was appointed as an Additional Director on July 4, 2011. 2.2 Other changes in the Board during the financial year 2010 – 2011 • Mr. Rajesh Hukku and Mr. R Ravisankar ceased to be Directors with effect from April 29, 2010 • Mr. Charles Phillips ceased to be a Director with effect from July 22, 2010 • Ms. Tarjani Vakil ceased to be a Director with effect from August 25, 2010 • Mr. N R Kothandaraman (N R K Raman) ceased to be a Director with effect from October 25, 2010. Oracle Financial Services Software – Annual Report 2010-2011


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    2.3 Attendance of each Director at the Board Meetings and the last Annual General Meeting The Company holds Board Meetings at regular intervals. The detailed agenda along with the explanatory notes are circulated in advance. The Directors can suggest the inclusion of any item in the agenda at the Board Meeting. The Independent Directors actively participate in the Board Meetings and contribute to the decision making process by expressing their opinions, views and suggestions. During the Financial Year 2010 – 2011, eight Board Meetings were held on the following dates: April 29, 2010, May 7, 2010, July 22, 2010, August 5, 2010, August 25, 2010, October 25, 2010, November 2, 2010 and February 4, 2011. The attendance of the Directors at the Board Meetings and the Annual General Meeting held during the financial year 2010 – 2011 are as given below: Name of the Director Number of Board Number of Board Meetings attended Last AGM Meetings attended Attended In person On phone Mr. William T Comfort, Jr. 8 4 4 Yes Mr. Frank Brienzi1 8 3 5 Yes Ms. Dorian Daley 6 – 6 No Mr. Rajesh Hukku2 1 1 – N.A. Mr. Joseph John3 8 8 – Yes Mr. Y M Kale 8 8 – Yes Mr. Chaitanya Kamat4 3 3 – N.A. Mr. Charles Phillips5 1 – 1 N.A. Mr. N R K Raman6 6 6 – Yes Mr. R Ravisankar7 1 1 – N.A. Ms. Tarjani Vakil8 3 3 – No Mr. S Venkatachalam9 3 3 – N.A. Mr. William Corey West10 4 1 3 Yes Mr. Derek H Williams 7 2 5 No 1 Mr. Frank Brienzi was appointed as a Director in the Annual General Meeting held on August 25, 2010. 2 Mr. Rajesh Hukku ceased to be a Director with effect from April 29, 2010. 3 Mr. Joseph John was appointed as a Director and Whole-time Director in the Annual General Meeting held on August 25, 2010. He ceased to be a Director with effect from March 31, 2011. 4 Mr. Chaitanya Kamat was appointed as an Additional Director and as the Managing Director and CEO with effect from October 25, 2010. 5 Mr. Charles Phillips ceased to be a Director with effect from July 22, 2010. 6 Mr. N R K Raman ceased to be a Director with effect from October 25, 2010. 7 Mr. R Ravisankar ceased to be a Director with effect from April 29, 2010. 8 Ms. Tarjani Vakil ceased to be a Director with effect from August 25, 2010. 9 Mr. S Venkatachalam was appointed as an Additional Director with effect from October 25, 2010. 10 Mr. William Corey West was appointed as a Director in the Annual General Meeting held on August 25, 2010. 2.4 Details of other directorships Details of the directorships of the Company’s Directors in other companies as on March 31, 2011 are given below: Name of the Director Other directorships Mr. William T Comfort, Jr. Citigroup Venture Capital Court Square Capital Partners Limited Deutsche Annington (DAIG) Nabors Industries CX Partners Mr. Frank Brienzi NPower, Texas Aidmatrix Ms. Dorian Daley BEA Crossgain International BEA Systems Ireland Holding Limited Eontec Limited J.D. Edwards Europe Limited Netsure Telecom Limited OCAPAC Distributor Partner OCAPAC Hardware Partner OCAPAC Holding Company OCAPAC Research Company OCAPAC Research Partner Oracle America, Inc. Oracle Credit Corporation Oracle Global (Mauritius) Limited Oracle Global Holdings, Inc. Oracle International Corporation 17


  • Page 20

    Name of the Director Other directorships Ms. Dorian Daley (continued) Oracle International Holding Company Oracle International Technology Corporation Oracle Systems Corporation Oracle Technology Company Siebel Systems Ireland Holding Limited Siebel Systems, Inc. Sun Microsystems Technology Limited Mr. Joseph John – Mr. Y M Kale Ashok Leyland Limited Gulf Oil Marine Limited Hinduja Foundries Limited IndusInd Bank Limited Mr. Chaitanya Kamat – Mr. S Venkatachalam Bharti AXA – Trustee Services Private Limited State Bank of India Central Board, Mumbai Mr. William Corey West BEA Crossgain International BEA Systems Ireland Holding Limited Eontec Limited J.D. Edwards Europe Limited Netsure Telecom Limited OCAPAC Distributor Partner OCAPAC Hardware Partner OCAPAC Holding Company OCAPAC Research Company OCAPAC Research Partner Oracle Australia Holdings Pty. Ltd. Oracle Consolidation Australia Pty. Ltd. Oracle Corporation Malaysia Holdings Sdn Bhd. Oracle Global (Mauritius) Limited Oracle Hong Kong Holdings Ltd. Oracle Singapore Holdings Pte Ltd. Oracle Technology Company Siebel Systems Ireland Holding Ltd. Sun Microsystems Technology Limited Mr. Derek H Williams Nihon Oracle Kabushiki Kaisha 2.5 Details of memberships of Board Committees None of the Directors of the Company hold memberships in more than ten Committees, nor is any Director a Chairperson in more than five Committees of the Boards of the companies where he/she holds directorship. For this purpose, “Committees” include Audit Committee and Shareholders’ Grievances Committee of a Company. The details of the memberships of the Company’s Directors in the above mentioned committees of all the Indian Public Limited Companies of which they are members as on March 31, 2011 are given below: Name of the Director Audit Shareholders’ Grievances Committee Committee Chairperson Member Chairperson Member Mr. William T Comfort, Jr. – – – – Mr. Frank Brienzi – – – – Ms. Dorian Daley – – – – Mr. Joseph John – – – – Mr. Y M Kale 1 – – – Mr. Chaitanya Kamat – – – – Mr. S Venkatachalam 1 2 1 1 Mr. William Corey West – 1 – – Mr. Derek H Williams 1 – – – Oracle Financial Services Software – Annual Report 2010-2011


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    2.6 Brief resume of Directors who will be retiring by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment Mr. Derek H Williams Mr. Derek H Williams, born on December 30, 1944, is an Executive Vice President of Oracle Corporation. Mr. Williams was at the helm of Oracle’s Asia Pacific operations from 1991 to 2009, and has led Oracle Japan since 2000. From June 1, 2011, Mr. Williams became responsible for the Sun Hardware business in Asia Pacific and Japan. Mr. Williams is a member of Oracle’s Executive Committee and a Director for Oracle Japan. Mr. Williams does not hold any equity share of the Company as on date. Mr. William T Comfort, Jr. Mr. William T Comfort, Jr., born on August 3, 1937, is the Chairman of Citigroup Venture Capital. He received his B.A. and LL.B. and was honoured with the Doctorate of Humane Letters (D.H.L) at the University of Oklahoma. He received an LL.M. at the New York University Law School. He is a trustee of the New York University Law Center Foundation, the John A. Hartford Foundation, Inc., and was an adjunct professor at the Columbia Business School. He is currently Chairman of Citigroup Venture Capital and Chairman of the Investment Committee of Court Square Capital Partners and CX Partners. He is also a member of the Board of Directors of Deutsche Annington (DAIG - Germany) and Nabors Industries (Bermuda). Mr. Comfort has been associated with the Company as a board member since 1998 and was appointed as Chairman of its Board of Directors on March 24, 2009. Mr. Comfort does not hold any equity share of the Company as on date. 2.7 Brief resume of Directors proposed to be appointed at the ensuing Annual General Meeting of the Company Mr. Chaitanya Kamat Mr. Chaitanya Kamat (Chet), born on September 14, 1961, is the Managing Director and CEO of the Company. He brings more than 25 years of financial services, consulting and business transformation experience to his role at Oracle Financial Services Software Limited. Prior to joining Oracle, Chet was Managing Director at STG, a leading private equity firm focused on investing in software and enterprise services companies. At STG, Chet was responsible for the transformation and operations of its portfolio companies with a specific focus on their use of global operating models. Earlier, Chet worked as the CEO of a retail financial services startup and at Accenture. Joining Accenture in 1986, Chet worked across Accenture locations in India, United States, Sweden, Hungary and the Philippines in a range of business consulting and large scale systems integration engagements. In his last role at Accenture, Chet was the Managing Partner of Accenture’s India Delivery Centre Network which he was responsible for establishing from scratch and growing to a 13,000 strong unit serving over 200 global clients. Chet Kamat obtained his Masters in Computer Science from the University of Bombay and a Post Graduate Diploma in Management from the Indian Institute of Management, Ahmedabad. Chet has served as the Chairman of the Board of Directors at Teleca AB, and as a Director on the Boards of Netik Inc., Symphony Marketing Solutions Inc. and The Capital Markets Company NV. Mr. Kamat is a member of the ESOP Allotment Committee of the Board. He does not hold any equity share of the Company as on date. Mr. S Venkatachalam Mr. S Venkatachalam, born on November 8, 1944, has served Citibank N. A. for nearly 30 years and has held senior positions there. He is currently on the Central Board of State Bank of India and Bharti AXA – Trustee Services Private Limited. He is a Chartered Accountant by profession. He has served as an advisor to Fullerton India Credit Corporation Ltd., a wholly owned subsidiary of Temasek Holdings (Private) Limited, Singapore and has also served as Senior Consultant with A. F. Ferguson & Co., Chartered Accountants, Mumbai (now a part of Deloitte Haskins & Sells). He has rich experience in the field of banking, finance, administration, compliance, taxation and labour laws. He is well regarded in the financial services industry and by regulatory bodies. Mr. Venkatachalam is also a member of the Audit Committee, ESOP Allotment Committee, Shareholders Grievances Committee and Transfer Committee of the Board. Mr. Venkatachalam holds 1,000 equity shares of the Company as on date. Mr. Robert K Weiler Mr. Robert K Weiler was appointed as an Additional Director of the Company by the Board on July 4, 2011. Mr. Robert K Weiler, born on February 9, 1951, is an Executive Vice President of Oracle’s Global Business Units. Previously he was Chairman and CEO of Phase Forward, a leading provider of integrated data management solutions for clinical trials and drug safety. Mr. Weiler has more than 30 years of technology-industry leadership experience, including his previous tenure as Giga Information 19


  • Page 22

    Group’s Chairman, President and CEO. Earlier in his career, Mr. Weiler served as President and CEO of Eastman Software (formerly Wang Software), as well as Senior Vice President, Worldwide Sales and Marketing, for Lotus Development Corporation, where he was instrumental in expanding the company’s Lotus Notes business. Mr. Weiler recently served on the board of SADD (Students Against Destructive Decisions), and he previously served on the boards of the directors of the Waterville Valley Company, Saint Anselm’s College, Corporate Software, Distributed Management Systems, Cullinet Software, Interleaf, DataLogix, and Giga Information Group. Mr. Weiler received a B.A. from Saint Anselm’s College, where he additionally received an honorary doctorate in 2000. He received the Ernst & Young Entrepreneur of the Year 2010 Award in the Healthcare IT category in New England. In 2006, he was named to the prestigious PharmaVOICE 100 list, and he was also named ‘2006 CEO of the Year’ by the Massachusetts Technology Leadership Council, an award that honours individuals who best exemplify leadership and excellence in business and technology. Subsequent to this award, Mr. Weiler was invited to become a trustee of the Council. Mr. Weiler does not hold any equity share of the Company as on date. 3. Audit committee 3.1 Primary objectives and powers of the Audit Committee The primary objective of Audit Committee is to monitor and provide effective supervision of the management’s financial reporting process and to ensure accurate, timely and proper disclosures and transparency, integrity and quality of the financial reporting. The powers of the Audit Committee include the following: 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. 3.2 Broad terms of reference The terms of reference of the Audit Committee are as follows: 1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 4. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Section 217(2AA) of the Companies Act, 1956 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the draft audit report 5. Reviewing, with management, the quarterly financial statements before submission to the Board for approval. 6. Reviewing, with management, the performance of statutory and internal auditors and the adequacy of the internal control systems. Oracle Financial Services Software – Annual Report 2010-2011


  • Page 23

    7. Reviewing the adequacy of the internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors regarding any significant findings and any follow-up required. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. 10. Discussion with statutory auditors, before the audit commences, about the nature and scope of the audit as well as post-audit discussion to determine any area of concern. 11. To determine the reasons for any substantial defaults in the payment to depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 12. To review the functioning of the Whistle Blower policy. 13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 3.3 Composition of the committee The Composition of Audit Committee as on March 31, 2011 was as follows: Name of the Member Mr. Y M Kale Chairman, Non-Executive, Independent Director Mr. S Venkatachalam Member, Non-Executive, Independent Director Mr. William Corey West Member, Non-Executive, Non-Independent Director 3.4 Meetings and attendance During the Financial Year 2010 – 2011, five meetings of the Committee were held on May 6, 2010, August 5, 2010, November 2, 2010, February 4, 2011 and February 24, 2011. The member’s attendance at the Committee Meetings was as given below: Name of the Member Number of meetings attended In person On phone Mr. Y M Kale 5 – Mr. William T Comfort, Jr.1 – 2 Ms. Tarjani Vakil2 2 – Mr. S Venkatachalam3 3 – Mr. William Corey West4 – 3 1 Mr. William T Comfort, Jr. ceased to be a member of the Committee with effect from October 25, 2010. 2 Ms. Tarjani Vakil ceased to be a member of the Committee with effect from August 25, 2010. 3 Mr. S Venkatachalam was appointed as a member of the Committee with effect from October 25, 2010. 4 Mr. William Corey West was appointed as a member of the Committee with effect from August 5, 2010. The auditors of the Company were invited for the above meetings. 3.5 Audit committee’s recommendations The Committee reviewed the financial results of the Company prepared in accordance with the Indian GAAP (including consolidated results) as at and for the quarters ended June 30, 2010, September 30, 2010 and December 31, 2010 as also for the year ended March 31, 2011 and recommended the same to the Board for adoption. The Committee recommended to the Board the re-appointment of M/s. S. R. Batliboi & Associates, Chartered Accountants, as statutory auditors of the Company for the financial year 2011 – 2012. The Committee also recommended the appointment of Internal Audit Group of the Company headed by Mr. Atul Kumar Gupta, Head-PQMG as the Internal Auditor to conduct the internal audit for the financial year 2011 – 2012. The Committee also reviewed Internal Auditors’ reports and related reports on actions taken, risk management policies, compliance with the clause 49 of the Listing Agreement, compliance and ethics tracker, etc. from time to time. 21


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    4. Compensation committee 4.1 Brief description of terms of reference The scope of Compensation Committee is to determine the compensation of the Directors and any profit linked bonus policies of the Company. The Compensation Committee also approves, allocates and administers the Employee Stock Option Plans – ESOP 2002 and ESOP 2010 Schemes, reviews performance appraisal criteria and sets norms for ESOP allocations. 4.2 The Composition of the Committee The Composition of Compensation Committee as on March 31, 2011 was as follows: Name of the Member Mr. William T Comfort, Jr. Chairman, Non‑Executive, Independent Director Mr. Frank Brienzi1 Member, Non‑Executive, Non‑Independent Director Mr. Y M Kale Member, Non‑Executive, Independent Director 1 Mr. Frank Brienzi was appointed as a member of the Committee on July 22, 2010. 4.3 Meeting and attendance During the year, one meeting of the Committee was held on August 25, 2010 and all the members of the Committee were present for the meeting. 4.4 Compensation policy The Compensation Committee determines and recommends to the Board the compensation payable to the Directors. The limit for the commission to be paid to the Board members and the remuneration payable to the Managing Director and CEO of the Company are approved by the members of the Company. The annual compensation of the Non‑Executive Directors is approved by the Compensation Committee, within the parameters set by the members of the Company. The criteria for payment of commission to the non‑executive directors include a base commission plus incremental commission depending on the number and type of committees where they are Members or Chairpersons. The Committee also has the mandate to review and recommend compensation payable to the Senior Executives of the Company. It also sets norms for ESOP allocation. 4.5 Details of remuneration paid to the Directors during the financial year 2010 – 2011 are as follows: (All amounts in ` thousands, except number of ESOPs) Name of the Director ESOPs granted Commission Salary Contribution to Total Amount under ESOP paid Provident and paid Plans during other funds the year Mr. William T Comfort, Jr. – – – – – Mr. Frank Brienzi – – – – – Ms. Dorian Daley – – – – – Mr. Rajesh Hukku – – – – – Mr. Joseph John 10,600 – 7,700 610 8,310 Mr. Y M Kale – 1,466 – – 1,466 Mr. Chaitanya Kamat 60,000 – 8,024 704 8,728 Mr. Charles Phillips – – – – – Mr. N R K Raman – – 22,958 322 23,280 Mr. R Ravisankar – – – – – Ms. Tarjani Vakil – 362 – – 362 Mr. S Venkatachalam – 667 – – 667 Mr. William Corey West – – – – – Mr. Derek H Williams – – – – – Total 70,600 2,495 38,682 1,636 42,813 The Company accrues for gratuity benefit, compensated absences and bonus for all employees as a whole. It is not possible to ascertain the provision for individual director and hence the same has not been disclosed above. The Company discloses such benefits on cash basis. The terms and conditions of appointment of Mr. Chaitanya Kamat (Managing Director and CEO) and the remuneration paid to him are subject to the approval of members at the Annual General Meeting. The managerial remuneration paid to Mr. N R K Raman and Mr. Chaitanya Kamat was within the limits envisaged in the Companies Act, 1956. Mr. Y M Kale, Ms. Tarjani Vakil and Mr. S Venkatachalam, Non‑Executive, Independent Directors of the Company were paid remuneration by way of commission as approved by the members of the Company, not exceeding 1% of the net profits of the Company in any one financial year. There was no other remuneration paid to the Directors during the financial year 2010 – 2011 except as stated above. Oracle Financial Services Software – Annual Report 2010-2011


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    The terms of Employee Stock Options granted to the Directors are given below: Name of the Director Scheme Options Options Grant price Expiry Date Equity shares outstanding exercised (`) held as at as at during the March 31, 2011 March 31, 2011 year Mr. William T Comfort, Jr. – – – – – – Mr. Frank Brienzi – – – – – – Ms. Dorian Daley – – – – – – Mr. Rajesh Hukku ESOP 2002 Nil Nil 265.00 – 595,655 Mr. Joseph John ESOP 2002 Nil Nil 265.00 – 9,441 ESOP 2010 10,600 Nil 2,050.00 August 24, 2020 – Mr. Y M Kale ESOP 2002 – – 418.92 – – Mr. Chaitanya Kamat ESOP 2002 60,000 Nil 2,333.45 October 24, 2020 – Mr. Charles Phillips – – – – – – Mr. N R K Raman ESOP 2002 – – 265.00 – 60,000 Mr. R Ravisankar ESOP 2002 Nil – 265.00 – 74,272 Ms. Tarjani Vakil ESOP 2002 – – 559.60 – 9,125 Mr. S Venkatachalam – – – – – 1,000 Mr. William Corey West – – – – – – Mr. Derek H Williams – – – – – – The above options were issued at prevailing market price of shares on the respective dates of grant. The options vest over a period of 5 years from the date of grant and are subject to continued employment/directorship with the Company. During the year, the Board granted 60,000 options to the Managing Director and CEO under the ESOP 2002 at an exercise price of ` 2,333.45 and also adopted a new ESOP 2010 Scheme. The Board granted 618,000 options under the ESOP 2010 Scheme to the eligible employees of the Company and its subsidiaries at an exercise price of ` 2,050/- per option. 5. Shareholders’ Grievances Committee 5.1 Composition of the Committee The composition of Shareholders’ Grievances Committee as on March 31, 2011 was as follows: Name of the Member Mr. S Venkatachalam Chairman, Non-Executive, Independent Director Mr. Makarand Padalkar Chief Financial Officer 5.2 Scope of Shareholders’ Grievances Committee’s activities The scope of the Shareholders’ Grievances Committee is to review and address the grievances of the members in respect of share transfers, transmission, dematerialisation and rematerialisation of shares and other share related activities. During the year, two meetings of the Committee were held on August 5, 2010 and February 4, 2011. The member’s attendance at the Committee Meetings was as given below: Name of the Member Number of meetings attended In person Ms. Tarjani Vakil1 1 Mr. Makarand Padalkar 2 Mr. S Venkatachalam2 1 1 Ms. Tarjani Vakil ceased to be a member of the Committee with effect from August 25, 2010. 2 Mr. S Venkatachalam was appointed as a member of the Committee with effect from October 25, 2010. 6. Company Secretary and Compliance Officer Company Secretary and Compliance Officer Mr. Hoshi D Bhagwagar Address Oracle Financial Services Software Limited 399, Subhash Road Vile Parle (East) Mumbai 400057 Tel + 91-22-6718 5326 Fax + 91-22-2831 5593 e-mail hoshi.bhagwagar@oracle.com 23


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    7. Details of shareholders’ complaints received, resolved and outstanding during the financial year 2010 – 2011 Particulars No. of Complaints Complaints outstanding on April 1, 2010 – Complaints received during the financial year ended March 31, 2011 26 Complaints resolved during the financial year ended March 31, 2011 24 Complaints outstanding on March 31, 2011 2 Number of pending share transfers as on March 31, 2011 – Nil 8. Transfer Committee The composition of Transfer Committee as on March 31, 2011 was as follows: Name of the Member Mr. S Venkatachalam Chairman, Non-Executive, Independent Director Mr. Makarand Padalkar Chief Financial Officer During the year, two meetings of the Committee were held on August 26, 2010 and March 25, 2011. The member’s attendance at the Committee Meetings was as given below: Name of the Member Number of meetings attended In person Mr. Joseph John1 1 Mr. Makarand Padalkar 2 Mr. S Venkatachalam2 1 1 Mr. Joseph John ceased to be a member of the Committee with effect from February 4, 2011. 2 Mr. S Venkatachalam was appointed as a member of the Committee with effect from February 4, 2011. 9. ESOP Allotment Committee The composition of ESOP Allotment Committee as on March 31, 2011 was as follows: Name of the Member Mr. Y M Kale Chairman, Non-Executive, Independent Director Mr. Joseph John Member, Executive, Non-Independent Director Mr. Makarand Padalkar Chief Financial Officer During the year, five meetings of the Committee were held on April 5, 2010, June 16, 2010, September 30, 2010, December 9, 2010 and February 24, 2011. The member’s attendance at the Committee Meetings was as given below: Name of the Member Number of meetings attended In person Mr. Y M Kale1 1 Mr. Makarand Padalkar 5 Ms. Tarjani Vakil2 2 Mr. Joseph John3 2 1 Mr. Y M Kale was appointed as the Chairman of the Committee with effect from February 4, 2011. 2 Ms. Tarjani Vakil ceased to be a member of the Committee with effect from August 25, 2010. 3 Mr. Joseph John ceased to be a member of the Committee with effect from March 31, 2011. 10. General body meetings 10.1 Location, date and time where last three Annual General Meetings were held: Financial Year Venue Date Time 2009 – 2010 The Leela Kempinski, August 25, 2010 3.00 p.m. Sahar, Andheri (East), Mumbai 400059 2008 – 2009 The Leela Kempinski, August 25, 2009 3.00 p.m. Sahar, Andheri (East), Mumbai 400059 2007 – 2008 The Leela Kempinski, August 22, 2008 3.00 p.m. Sahar, Andheri (East), Mumbai 400059 Oracle Financial Services Software – Annual Report 2010-2011


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    10.2 The details of Special Resolutions passed in AGMs during the last three years are given below: Financial Day, Date & Time Venue Gist of Special Resolution Passed Year 2009 – 2010 Wednesday, August 25, 2010 The Leela Kempinski, Sahar, Andheri No special resolution was passed. At 3.00 p.m. (East), Mumbai 400059 2008 – 2009 Tuesday, August 25, 2009 The Leela Kempinski, Sahar, Andheri No special resolution was passed. At 3.00 p.m. (East), Mumbai 400059 2007 – 2008 Friday, August 22, 2008 The Leela Kempinski, Sahar, Andheri No special resolution was passed. At 3.00 p.m. (East), Mumbai 400059 10.3 The details of Special Resolution passed in the EGM during the last three years are given below: Financial Year Day, Date & Time Venue Gist of Special Resolution Passed 2008 – 2009 Monday, InterContinental The Name of the Company be Changed from ‘i-flex solutions Limited’ August 11, 2008 The Grand to ‘Oracle Financial Services Software Limited’ and that the Name ‘i-flex At 3.00 p.m. Mumbai, Sahar solutions Limited’ wherever it appears in the Memorandum and Articles Airport Road, of Association of the Company and other records be substituted by the Andheri (East), new Name ‘Oracle Financial Services Software Limited’. Mumbai 400059 There were no EGMs held in the Financial Year 2009 – 2010 and 2007 – 2008. 10.4 There were no matters requiring approval of the members through Postal Ballot in previous year. 10.5 No special resolution is currently proposed to be conducted through postal ballot. 10.6 Procedure for the Postal ballot Process: After receiving the approval of the Board of Directors, notice of the Postal Ballot, text of the Resolution and Explanatory Statement, Postal Ballot Form and self-addressed postage pre-paid envelopes are sent to the members to enable them to consider and vote for or against the proposal within a period of 30 days from the date of dispatch. The calendar of events containing the activity chart is filled with the Registrar of Companies within 7 days of the passing of the Resolution by the Board of Directors of the Company. After the last date for receipt of the ballots, the Scrutiniser after due verification, submits the results to the Chairman of the Board of Directors of the Company. Thereafter, the Chairman declares the result of the Postal ballot. The same is published in the Newspapers and displayed on the website and the Notice Board at the registered office of the Company. 11. Disclosures a. All the relevant information in respect of materially significant related party transactions, i.e., transactions of the Company of material nature with its promoters, directors or management or their relatives, subsidiaries of the Company, etc. has been disclosed in the respective financial statements presented in the Annual Report. The Company did not undertake any transaction with any related party having potential conflict with the interest of the Company at large. b. Company has complied with statutory compliances and no penalty or stricture is imposed on the Company by the Stock Exchanges or Securities and Exchange Board of India (SEBI) or any other statutory authority on any matter related to the capital markets during the last three years. c. The Company has a Whistle Blower Policy which provides adequate safeguards to employees who wish to raise concerns about violations of the Code of Conduct, incorrect or misrepresentation of any financial statements and reports, unethical behaviour, etc. No employee has been denied access to the Audit Committee. d. The Company is fully compliant with the applicable mandatory requirements of Clause 49 of the listing agreement entered with the Stock Exchanges. The Clause further states that the non-mandatory requirements may be implemented at the discretion of the Company. Thus, of the non-mandatory requirements, the Company has complied with the requirement of Compensation Committee and also has a Whistle Blower Policy in place. e. The Ministry of Corporate Affairs, Government of India had issued the Corporate Governance Voluntary Guidelines 2009 (“the Guidelines”). The objective of these Guidelines is to encourage companies to voluntarily adopt best practices in corporate governance. The Guidelines focuses on matters relating to functions of the Board, Audit Committee, Auditors role and 25


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    Secretarial Compliance. The corporate governance framework of the Company already encompasses a significant portion of the recommendations contained in the Guidelines. f. Unclaimed Shares In terms of clause 5A of the listing agreement entered with stock exchanges, the information with regard to unclaimed/undelivered shares relating to the initial public offering lying with the Registrar and Transfer Agents of the Company is as follows: Particulars No. of Shareholders No. of Shares of ` 5/- each Aggregate number of Shareholders and outstanding shares as on April 1, 2010 2 40 Number of shareholders who approached the Company for transfer of shares – – during the year Number of shareholders and shares transferred during the year – – Aggregate number of Shareholders and shares as on March 31, 2011 2 40 The Company is in process of crediting these shares into the Unclaimed Shares Demat Suspense Account. Voting rights of these unclaimed/undelivered shares shall remain frozen until the same is claimed by the shareholders. 12. Means of communication During the Financial Year 2010-2011: – The quarterly, half yearly and annual results of the Company were published in widely circulated English and Marathi newspapers, such as The Economic Times and Maharashtra Times. – Company’s quarterly financial results, press releases, annual reports and other relevant corporate documents are posted on the Company’s website www.oracle.com/financialservices. – Detailed Management’s discussion and analysis Reports covering Indian GAAP unconsolidated and consolidated financials have been included in this Annual Report. – The Company had been filing information relating to its financial results and Distribution of shareholding on a quarterly basis on Electronic Data Information Filing and Retrieval System (EDIFAR) http://sebiedifar.nic.in. Following a circular no. CIR/CFD/DCR/3/2010 dated April 16, 2010 issued by the SEBI, this practice has been discontinued with effect from April 1, 2010. – The Company has uploaded the information relating to its financial results, shareholding pattern and report on corporate governance on website – http://corpfiling.co.in. – The details of directors are also updated on Directors Database - http://www.directorsdatabase.com, a Corporate Governance initiative of the Bombay Stock Exchange Limited. Oracle Financial Services Software – Annual Report 2010-2011


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    13. General shareholder information Annual General Meeting Day and Date Thursday, August 18, 2011 Time 3.00 p.m. Venue The Leela Kempinski, Sahar, Andheri (East), Mumbai 400059 Financial Year April 1, 2010 to March 31, 2011 Date of Book Closure Saturday, August 13, 2011 to Thursday, August 18, 2011 (both days inclusive) Listing on Stock Exchanges at Bombay Stock Exchange Limited (BSE); and National Stock Exchange of India Limited (NSE) Stock Code Bombay Stock Exchange Limited (BSE) 532466 National Stock Exchange of India Limited (NSE) OFSS Listing The annual listing fees for the year 2011 – 2012 have been paid to BSE and NSE. The Company has paid Custodial fees for the year 2011 – 2012 to National Securities Depository Limited and Central Depository Services (India) Limited on the basis of number of beneficial accounts maintained by them as on March 31, 2011. Unclaimed Dividend Pursuant to Sections 205A, 205C and other applicable provisions, if any, of the Companies Act, 1956, any money transferred to the unpaid dividend account which remains unpaid or unclaimed for a period of 7 years from the date they become due for payment, is required to be transferred to the ‘Investor Education and Protection Fund’ set up by the Central Government. Accordingly, the amount of unclaimed dividend for the financial year ended March 31, 2004 will be transferred to the ‘Investor Education and Protection Fund’ in due course. Once the amount is so transferred, no claims shall lie against the aforesaid fund or the Company in respect of such dividend amount thereafter. The members are requested to send to the Company their claims, if any, for the dividend for financial year 2003 – 2004 onwards immediately. 14. Market price data Monthly high, low and volume of the shares of the Company traded on the stock exchange from April 1, 2010 to March 31, 2011 are given below: Month and Year High (`) Low (`) Volume of High (`) Low (`) Volume of Shares Shares BSE NSE April 2010 2,327.95 2,133.00 148,680 2,329.00 2,100.60 981,913 May 2010 2,177.00 1,995.00 287,886 2,180.00 1,986.00 1,011,261 June 2010 2,270.00 2,035.50 494,238 2,269.80 2,018.75 1,773,297 July 2010 2,284.95 2,075.00 104,641 2,288.00 2,070.00 563,271 August 2010 2,199.00 2,013.00 207,985 2,189.00 2,011.10 1,215,683 September 2010 2,290.60 2,033.05 315,950 2,290.00 2,035.05 1,429,903 October 2010 2,510.00 2,195.00 250,745 2,482.80 2,075.20 1,334,180 November 2010 2,400.00 2,020.00 197,138 2,390.00 2,015.00 865,639 December 2010 2,348.55 2,060.00 170,873 2,349.00 2,062.80 769,266 January 2011 2,355.00 2,140.15 157,801 2,400.00 2,142.00 705,145 February 2011 2,298.80 1,951.00 193,803 2,300.00 1,959.80 871,968 March 2011 2,090.00 1,910.10 164,659 2,149.80 1,929.00 406,153 27


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    Relative movement chart The chart below gives the comparison of your Company’s share price movement on NSE vis-à-vis the movement of S&P CNX NIFTY for the year 2010 – 2011. 7,000 3,000 6,000 2,500 S&P CNX NIFTY OFSS Price 5,000 2,000 4,000 3,000 1,500 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 OFSS Price S&P CNX NIFTY The chart below gives the comparison of your Company’s share price movement on NSE vis-à-vis the movement of S&P CNX NIFTY since the listing of the share on NSE. 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 Jul 2002 Jul 2003 Jul 2004 Jul 2005 Jul 2006 Jul 2007 Jul 2008 Jul 2009 Jul 2010 Jul 2011 OFSS Price S&P CNX NIFTY Oracle Financial Services Software – Annual Report 2010-2011


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    15. Registrars and Transfer Agents Link Market Services Limited, an Australia-based global registry and financial services company, has acquired 51% stake as a strategic investment in Link Intime India Private Limited, the Registrars and Transfer Agents of the Company (“the Registrars”). Consequently, the name of the Registrars has been changed from ‘Intime Spectrum Registry Limited’ to ‘Link Intime India Private Limited’. The management and executive team as well as location and address of the Registrars remain unchanged. Name Link Intime India Private Limited Address C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai 400078 Tel +91-22-2594 6970 Fax +91-22-2594 6969 e-mail rnt.helpdesk@linkintime.co.in Contact person Mr. Dnyanesh Gharote, Asst. Vice President – Corporate Registry Branch 203, Davar House, 197/199 D. N. Road, Fort, Mumbai 400001 Tel +91-22-2269 4127 16. Physical share certificate transfer system The Registrar and Transfer Agent (“the Registrar”), on receipt of transfer deed with respective share certificate(s), scrutinises the same and verifies signature(s) of transferor(s) on the transfer deed with specimen signature(s) registered with the Company. A list of such transfers is prepared and checked thoroughly and a transfer register is prepared accordingly. The transfer register is placed before the Transfer Committee Meeting for approval, which meets at regular intervals. During the last financial year there were no requests received for transfer of shares in physical mode. Secretarial Audit A qualified Practicing Chartered Accountant has carried out reconciliation of Share Capital Audit every quarter to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed share capital. The audit confirms that the total issued/paid-up share capital is in agreement with the aggregate total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL. 17. Distribution of Shareholding as on March 31, 2011 Shares of nominal value of (`) Number of % Share amount (`) % to Equity Shareholders Up to 2,500 16,960 90.83 3,528,655 0.84 2,501 – 5,000 409 2.19 1,588,420 0.38 5,001 – 10,000 392 2.10 2,934,875 0.70 10,001 – 20,000 321 1.72 4,808,315 1.15 20,001 – 30,000 135 0.72 3,379,155 0.81 30,001 – 40,000 99 0.53 3,454,405 0.82 40,001 – 50,000 58 0.31 2,689,805 0.64 50,001 – 100,000 151 0.81 10,548,985 2.51 100,001 & Above 148 0.79 386,541,395 92.15 Total 18,673 100.00 419,474,010 100.00 18. Shareholding per Category as on March 31, 2011 Category of shareholders Number of shares % Promoters: Oracle Global (Mauritius) Ltd 67,481,698 80.44 Mutual Funds/UTI 3,221,944 3.84 Financial Institutions/Banks 445,372 0.53 Insurance Companies – – Foreign Institutional Investors 2,302,505 2.75 Bodies Corporate 589,909 0.70 Individuals – i. Holding nominal share capital up to ` 1 lakh 4,716,288 5.62 ii. Holding nominal share capital in excess of ` 1 lakh 2,143,718 2.56 Clearing Member 69,287 0.08 Market Maker 8,881 0.01 Foreign Nationals 4,000 0.01 NRI (Repatriate) 983,758 1.17 NRI (Non-Repatriate) 1,288,633 1.54 Overseas Corporate Bodies 800 0.00 Directors 10,441 0.01 Trust 195,456 0.23 HUF 17,233 0.02 Foreign Mutual Fund 414,879 0.49 Total 83,894,802 100.00 29


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    During the financial year 2010-2011: 1. The Company issued and allotted 39,945 equity shares to eligible employees who exercised their ESOPs during the year. 2. The Company has not issued any ADR/GDR. 3. The promoters have not pledged any of the shares held in the Company. 19. Dematerialisation of shares and liquidity The shares of the Company are under compulsory demat mode. Under the Depository System, the International Securities Identification Number (ISIN) allotted to the Company’s shares is INE881D01027. As on March 31, 2011, 98.67% of the shares of the Company were in electronic form. 20. Address for correspondence Registered Office Oracle Financial Services Software Limited Oracle Park Off Western Express Highway Goregaon (East) Mumbai 400063 Maharashtra India Tel +91-22-6718 3000 Fax +91-22-6718 3001 e-mail: investors-vp-ofss_in@oracle.com The details of other office addresses in India have been mentioned in the Corporate information section of the annual report. Oracle Financial Services Software – Annual Report 2010-2011


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    Annexure to Directors’ report To The Board of Directors Oracle Financial Services Software Limited Mumbai This is to certify that: (a) We have reviewed financial statements and the cash flow statement of Oracle Financial Services Software Limited (“the Company”) for the financial year ended March 31, 2011 and that to the best of our knowledge and belief: (i) These statements do not contain any materially untrue statement/figures or omit any material fact or contain statements/figures that might be misleading; (ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the financial year ended March 31, 2011 which are fraudulent, illegal or violative of the Company’s code of conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. (d) We have indicated to the auditors and the Audit Committee: (i) Significant changes in internal control over financial reporting during the financial year ended March 31, 2011, if any; (ii) Significant changes in accounting policies during the financial year ended March 31, 2011, if any; and that the same have been disclosed in the notes to the financial statements; and (iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting. (e) We further declare that all Board members and Senior Management Personnel have affirmed compliance with Codes of Conduct for the financial year ended March 31, 2011. For Oracle Financial Services Software Limited Chaitanya Kamat Makarand Padalkar Managing Director and CEO Chief Financial Officer May 10, 2011 31


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    Auditors’ certificate To The Members of Oracle Financial Services Software Limited We have examined the compliance of conditions of corporate governance by Oracle Financial Services Software Limited (the ‘Company’), for the year ended on March 31, 2011, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For S. R. Batliboi & Associates Firm registration number: 101049W Chartered Accountants per Amit Majmudar Partner Membership No.: 36656 Mumbai, India July 15, 2011 Oracle Financial Services Software – Annual Report 2010-2011


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    Financials Financial statements for the year ended March 31, 2011 prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP) (Unconsolidated). 33


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    Management’s discussion and analysis of financial condition and results of operations The following discussion is based on our audited unconsolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in India and complying in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. You should read the following discussion of our financial condition and results of operations together with the detailed unconsolidated Indian GAAP financial statements and the notes to those statements. Our fiscal year ends on March 31 of each year. Information technology in the financial services industry Financial institutions today face many challenges in their quest to offer innovative products and services to customers. There have been significant shifts in the competitive landscape. These include price wars, the emergence of new business models, competitors from within and outside the industry who have effectively differentiated themselves, changes in buyer power and preferences and other opportunities and threats including deregulation. The focus of financial institutions is on the transformation of their business models to help identify cost-saving opportunities and enhance their ability to offer both targeted and improved levels of service to their customers. Besides reducing costs, financial institutions strive to gain competitive advantage by enhancing their reputation and creating greater institutional resilience. Financial institutions have been forced to abandon their traditional reliance on the use of single product or business silos. Today, to stay competitive, they have to offer a variety of integrated and global products in different markets while ensuring that their activities are in sync with market dynamics and evolving regulatory mandates. The emergence of new customer segments have made banks chose “next generation” models and offer new and innovative products and services. The recent turmoil in global financial markets has significant lessons for the risk management of financial institutions. A key lesson is institutions could be threatened by a liquidity crunch even if they are well capitalised. The management of liquidity risk is thus vital both for the sound management of financial institutions and for the stability of the financial system. Over the last few years central banks and regulatory bodies have actively reviewed their frameworks for financial regulation and supervision, including that of liquidity risk. The increasing operational complexity of financial institutions has been accompanied by innovation in the measurement and monitoring of their exposure to various risks. Stress testing, defined as the examination of the potential effects on a firm’s financial condition of a set of specified changes in risk factors, corresponding to exceptional but plausible events, is one such innovation. Stress and scenario testing is becoming an important element in the planning and risk management process, and is helping institutions identify, analyse and manage the risks inherent within their businesses. Financial institutions have to cope with increasing regulatory scrutiny and with the increasing sophistication of fraudulent activity. Fraudsters, today, are using a series of techniques to circumvent processes designed to detect and address fraud. Financial institutions are therefore turning towards technology to tackle fraud and comply with dynamic compliance mandates. Banks require services that address their need for renewal in areas such as consumer regulation, security and process consistency. Overview Oracle Financial Services Software Limited, majority owned by Oracle, is a world leader in providing IT solutions to the financial services industry. With its experience of delivering value-based IT solutions to global financial institutions, Oracle Financial Services Software understands the specific challenges that financial institutions face: the need for building customer intimacy and competitive advantage through cost-effective solutions while, simultaneously, adhering to the stringent demands of a dynamic regulatory environment. Our mission is to enable financial institutions to excel through the effective use of information technology. We offer financial institutions the world’s most comprehensive and, contemporary banking applications and a technology footprint that addresses their complex IT and business requirements. We are organised by region and business segment. We have two major business segments - the products business (comprising product licensing, customisation, implementation and support) and consulting services (comprising IT application and technology services). These segments are described in detail below: Products Oracle FLEXCUBE Oracle FLEXCUBE is a complete banking product suite for consumer, corporate, investment, mobile and internet banking, consumer lending, asset management and investor servicing, including payments. Oracle FLEXCUBE enables banks to standardise operations across multiple countries, transform their local operations as well as address niche business models like direct banking, Islamic 35


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    banking and mobile banking. Financial institutions use Oracle FLEXCUBE to respond faster to market dynamics, define and track processes, while ensuring compliance. The suite is also equipped with SWIFT 2011 enhancements. Oracle FLEXCUBE addresses the complete lending lifecycle across origination, servicing and collections. Customers can use the process centric architecture of the product to measure and manage their business based on process level insight. Oracle FLEXCUBE also helps SWIFT participants cost-effectively keep pace with emerging trends and optimise their SWIFTNet use to fully leverage SWIFTNet services and achieve their SWIFTNet objectives. Financial institutions can leverage this solution to consolidate SWIFTNet messaging, improve operational efficiency, reduce costs, and transform their business using a global messaging platform. This comprehensive solution supports the entire funds process flow, including orders, confirmations, cancellations, statements, reports, and transfers over the SWIFTNet Funds service using the InterAct messaging protocol. It provides easy integration with back-office applications and can also convert FIN or proprietary messages to ISO 20022 formats and vice versa. Oracle FLEXCUBE can also help financial institutions gain a foothold in the fast growing cross-border remittances segment; it can help financial institutions initiate, process, and disburse remittances. Oracle FLEXCUBE release 11.0 brings together Oracle’s vast experience in supporting banks across the globe. Banks can take advantage of the solution’s entire range of functionality and earn a higher return on investment through multi-product origination, support for broker-aided distribution, end-to-end lending and mortgage lifecycle management. Supported by an exhaustive set of Web services, SOA-enabled Oracle FLEXCUBE enables accelerated deployment and easy integration with a bank’s existing application landscape. Release 11.0 offers complete lifecycle support for consumer, commercial, syndicated, Islamic banking and mortgage processing - including origination, servicing, and collections. Oracle FLEXCUBE Enterprise Limits and Collateral Management offers a single source for managing exposure across a business portfolio. It enables centralised collateral management, limits definition, tracking and exposure measurement for effective exposure management and resource utilisation. Oracle FLEXCUBE Private Banking is a comprehensive solution for private banking. It gives wealth managers a unified view and analyses of their customers’ wealth across asset classes, and provides the added benefits of performance tracking and improved customer relationship management. The application is a comprehensive, customer-centric solution that offers a wealth management portal, a customer interaction tool, and portfolio management capabilities – all of which can be integrated with the existing core banking solutions used by a bank. Oracle FLEXCUBE Investor Servicing is a process enabled transfer agency and investor servicing solution. It helps financial institutions manage the complete fund lifecycle and reduce operational costs through process automation across fund structures, intermediary hierarchies, and investors. The ISO 20022 and 15022 compliant Oracle FLEXCUBE Investor Servicing ensures enhanced STP processing through support for a wide variety of SWIFT NET 4.0 messages. With a comprehensive business rules engine for products – hedge funds, mutual funds and unit-linked insurance products, funds, and fee structures, Oracle FLEXCUBE Investor Servicing allows fund management companies to configure and launch new products rapidly. Oracle Financial Services Analytical Applications are a complete and fully integrated portfolio of analytical solutions covering enterprise risk, performance management, regulatory compliance and customer insight. They are built upon a shared analytical infrastructure consisting of a unified financial services data model, shared analytical computations and the industry-leading Oracle Business Intelligence platform. The stack contains almost all point solutions that can be integrated to give a holistic view across all analytical applications. Financial institutions need an integrated approach that combines a diverse set of compliance and risk solutions to help them address not only present regulatory needs, but also emerging and future risk and regulatory requirements. The framework is rules driven, and readily adapts to change. Unlike other hard-coded solutions, Oracle Financial Services Analytical Applications provide both prebuilt rules and the capability to create and modify rules. This flexibility allows financial institutions to easily create custom rules for their own analytical requirements and to cost-effectively address ever-changing compliance regulations. Any rule can be viewed and audited for its underlying definition to enable supervisory oversight. Oracle Financial Services Consulting Oracle Financial Services Consulting offers Consulting Services, Application Services, Technology Services to financial institutions. Consulting Services Your Company offers an end-to-end consulting partnership, providing comprehensive business and technology solutions that enable financial services enterprises to improve process efficiency, optimise costs, meet risk and compliance requirements, define IT architecture and manage the transformation process. We offer consulting services in the areas of business transformation, risk and compliance, program management, IT architecture, IT governance and process improvement. PrimeSourcing Application Services Your Company provides comprehensive customised IT solutions for banking, securities and insurance. These high-quality IT solutions reflect the division’s domain expertise in financial services, including the knowledge gleaned from specialised practice lines like Oracle Financial Services Software – Annual Report 2010-2011


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    payments, business intelligence, CRM, Oracle Technology and Applications and testing. These IT solutions encompass the complete lifecycle of an IT application asset – from conceptualisation to creation and maintenance. Customers can take advantage of the in-depth expertise across a range of technologies such as Java, Microsoft, Mainframe and Open Source. Our services are much sought after by financial institutions as our IT processes, global infrastructure and development centres are based on COBIT best practices and include a comprehensive pool of proprietary methodologies and tools. PrimeSourcing Technology Services Your Company offers expertise in conceptualisation, design, evaluation, implementation and management of IT infrastructure for financial institutions under two service lines of Technology Management Services and Remote Infrastructure Management. These services are based on best practices such as ITIL (IT Infrastructure Library) and COBIT (Control Objectives for Information and related Technology) governance models (globally accepted standards for IT management and control) and are certified under ISO 27001 (Information Security Management System) and ISO 20000 (IT Services Management). Support services Oracle Financial Services Support offers support services for FLEXCUBE and Analytical Applications for Financial Services. These services help our customers accelerate adoption, achieve faster return on their application investments, and reduce the time, effort, and cost of operating their applications. These services also enable our customers to take advantage of the latest industry-leading technology enhancements to meet their application management needs effectively. Unmatched banking solutions footprint Together with Oracle, Oracle Financial Services Software offers the world’s most comprehensive and contemporary banking applications and technology footprint. This footprint spans the distribution, manufacturing, risk and finance and corporate administration functions of a financial institution. Each solution in the financial services application footprint is best-of-breed, open and integrated. Corporate development Ownership Interest of Oracle Global (Mauritius) Limited in the Company is 80.44% as at March 31, 2011. Business metrics Our total revenues in fiscal 2011 were ` 23,605.1 million, representing an increase of 5% from ` 22,434.7 million in fiscal 2010. The net income in fiscal 2011 was ` 9,679.8 million, against ` 6,608.5 million in fiscal 2010. Our net income margin in fiscal 2011 is at 41% as against 29% in fiscal 2010. We define net income margins for a particular period as the ratio of net income to total revenues during such period. We had 8,447 employees in India as on March 31, 2011 as against 9,083 at the end of the previous year. Products business (All amounts in ` millions) Year ended Year ended March 31, 2011 March 31, 2010 Product revenues 16,154.9 15,475.4 Cost of product revenues (6,224.3) (6,559.7) Sales and marketing expenses (661.1) (382.6) General and administrative expenses (640.7) (628.4) Depreciation and amortisation (133.1) (168.4) Income from operations 8,495.7 7,736.3 Operating margin* 53% 50% * Operating margin is defined as income from operations from the products business (excluding corporate expenses) as a percentage of total products revenues. Products revenues As of March 31, 2011, our product revenues were ` 16,154.9 million, an increase of 4% from ` 15,475.4 million during the fiscal year ended March 31, 2010. Product revenues represented 68% and 69% of total revenues for fiscal years ended 2011 and 2010 respectively. Our products revenues comprise license fees, professional fees for implementation and enhancement services and annual maintenance contract (Post Contract Support - PCS) fees for our products. License fee Our standard licensing arrangements for products provide the user a perpetual right to use the product for a pre-defined number of users and sites upon the payment of a license fee. The license fee is a function of a variety of quantitative and qualitative factors, including the number of copies sold, the number of users supported, the number and combination of the modules sold and the number of sites and geographical locations supported. The licenses are non-exclusive, personal, non-transferable and royalty free. 37


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    Implementation fee Along with licenses for our products, our customers can also optionally avail services related to the implementation of products at their sites, integration with other systems or enhancements to address their specific requirements. The customer is typically charged a service fee on either a fixed price basis or a time and material basis. Annual maintenance contract fees Customers typically sign an Annual Maintenance Contract with us under which, we provide technical support, maintenance, problem resolution and upgrades for the licensed products. These support agreements typically cover a period of 12 months and generate other revenue streams for us. The revenues generated from license fees and implementation and enhancement services rendered by us depends on factors such as the number of new customers added, milestones achieved, implementation time, etc. Therefore, such revenues typically vary from year to year. The annual maintenance contracts generate steady revenues and would grow to the extent that new customers are entering into the support phase of their lifecycle with us. The percentages of our revenues from these streams are as follows: Year ended Year ended March 31, 2011 March 31, 2010 License fees 21% 18% Implementation and customisation fees 53% 59% PCS arrangements 26% 23% Total 100% 100% Cost of products revenues and operating expenses The cost of our product revenues consists of costs attributable to the implementation, enhancement, maintenance and continued development, including research and development efforts, of our core product offerings - the Oracle FLEXCUBE suite of products, Oracle Financial Services Analytical Applications and other products. These costs primarily consist of compensation expenses for all software professionals working in the products business, project-related travel expenses, professional fees paid to software services vendors and the cost of application software for internal use. Research and development costs are expensed as incurred. Software product development costs are expensed as incurred until technological feasibility is established. Software product development cost incurred subsequent to the achievement of technological feasibility is not material and is expensed as incurred. Our operating expenses include selling and marketing expenses, general and administrative expenses that consist of commissions payable to our partners, product advertising, marketing expenses and allocated overhead expenses associated with support and monitoring functions such as human resources, facilities and infrastructure expenses, quality assurance and financial control and depreciation and amortisation. Services business (All amounts in ` millions) Year ended Year ended March 31, 2011 March 31, 2010 Services revenues 7,450.2 6,959.3 Cost of services revenues (5,381.7) (5,175.0) Sales and marketing expenses (112.6) (65.9) General and administrative expenses (372.5) (340.6) Depreciation and amortisation (160.4) (166.2) Income from operations 1423.0 1211.6 Operating margin* 19% 17% * Operating margin is defined as income from operations from the services business (excluding corporate expenses) as a percentage of total services revenues. Services revenues Our services revenues represented 32% and 31% of our total revenues for the fiscal year ended March 31, 2011 and 2010 respectively. Our services revenues were ` 7,450.2 million in the fiscal year ended March 31, 2011, representing an increase of 7% from ` 6,959.3 million in the fiscal year ended March 31, 2010. The contracts relating to our services business are either time or material contracts or fixed price contracts. The percentage of total services revenues from time and material contracts was 62% in fiscal 2011 and 64% in fiscal 2010, with the remainder of our services revenues attributable to fixed price contracts. We render services through offshore centres located in India, onsite teams operating at our customers’ premises and our development centres located in other parts of the world. Offshore services revenues consists of revenues from work conducted at our development centres in India and for Indian customers at their locations. Onsite revenues consist of work conducted at customer premises outside Oracle Financial Services Software – Annual Report 2010-2011


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    India and our development centres outside India. The composition of our onsite and offshore revenues is determined by the project lifecycle. Typically, the work involving the design of new systems or relating to a system rollout would be conducted onsite, while the core software development, maintenance and support activity may be conducted offshore. We received 47% and 62% of our services revenues from onsite work and 53% and 38% from offshore work during the fiscal years 2011 and 2010 respectively. Cost of services revenues and operating expenses The cost of revenues for services consists primarily of compensation expenses for our software professionals, cost of application software for internal use, travel expenses and professional fees paid to software services vendors. We recognise these costs as incurred. Our operating expenses include selling, general and administrative expenses and allocated overhead expenses associated with support and monitoring functions such as human resources, corporate marketing, information management systems, quality assurance and financial control and depreciation. Geographic breakup of revenues Our overall revenues continue to be well diversified. The following table represents the percentage breakup of our revenues for our products and services business by region: Year ended March 31, 2011 Year ended March 31, 2010 Products Services Total Products Services Total Revenues Revenues Revenues Revenues Revenues Revenues USA 15% 50% 26% 14% 52% 27% Europe 32% 17% 28% 40% 18% 33% Asia Pacific 25% 26% 25% 22% 24% 22% Middle East, India and Africa 24% 6% 18% 21% 5% 16% Latin America and Caribbean 4% 1% 3% 3% 1% 2% Total 100% 100% 100% 100% 100% 100% Customer concentration Our operations and business depend on our relationships with a large number of customers. Our revenues from our top ten customers, as a percentage of our total revenues is at 33% for fiscal 2011 as against 30% for fiscal year 2010. The top ten customers in our services business contributed 43% of the total services revenues and the top ten customers in our products business, contributed 32% of the total products revenues during fiscal 2011. The percentage of total revenues during fiscal years 2011 and 2010 that we derived from our largest customer, largest five customers and largest ten customers is provided in the accompanying table. In the table, various affiliates of Citigroup are classified as separate customers and the last row sets forth the percentage of total revenues we earned from the various affiliates of Citigroup with respect to our products and services business individually and with respect to our business taken as a whole. Products Revenues Services Revenues Total Revenues 2011 2010 2011 2010 2011 2010 Largest customer 10% 5% 11% 7% 9% 4% Top 5 customers 24% 25% 36% 28% 22% 22% Top 10 customers 32% 34% 54% 43% 33% 30% Citigroup and its affiliates 11% 12% 48% 36% 22% 20% Trade receivables Trade receivables as of fiscal March 31, 2011 and 2010 were ` 7,700.9 million and ` 8,772.4 million respectively. Our days sales outstanding (which is the ratio of sundry debtors to total sales in a particular year multiplied by 365) for fiscal 2011 and 2010 were approximately 119 and 143 respectively. The Company periodically reviews its trade receivables outstanding as well as the aging, quality of the trade receivables, customer relationship and history of the client. The following table represents the age profile of our trade receivables: Year ended Year ended March 31, 2011 March 31, 2010 Period in days 0 – 180 91% 87% More than 180 9% 13% Total 100% 100% Foreign currency and treasury operations A substantial portion of our revenues is generated in foreign currencies while a majority of our expenses are incurred in Indian Rupees (INR), with the remaining expenses are incurred in US Dollars (USD) and European currencies. 39


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    Our philosophy for treasury operations is conservative and we invest funds predominantly in time deposits with well-known and highly rated Indian and foreign banks. The Company has ensured adequate internal controls over asset management, including cash management operations, credit management and debt collection. The Company also maintains funds in USD, EUR, GBP and INR accounts based on comparative exchange rates, interest rates and currency requirements. Income taxes Till March 31, 2011, we partially benefited from tax holidays extended by the Government of India to software products and IT services exporters from specially designated software technology parks in India. As a result of these incentives, our operations were subject to relatively lower tax liabilities in India. These tax incentives included a 10-year tax holiday from Indian corporate income taxes for the operation of seven of our Indian facilities. As a result, a substantial portion of our pre-tax income was not subject to tax in recent years. The Finance Act, 2000, restricts the ten-year tax holiday available from the fiscal year in which the undertaking begins to manufacture or produce, or until fiscal 2011 (as extended in Finance Act, 2009), whichever is earlier. Thus, for our STPI units, this benefit expired on 31 March 2011. Income taxes also include foreign taxes representing income taxes payable overseas by us in various countries. Employee Stock Purchase Scheme (‘ESPS’) The Company has adopted the ESPS administered through a Trust (“the Trust”) to provide equity based incentives to key employees of the Company. As per the scheme, the Trust can purchase shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are allocated by the Trust to nominated employees at an exercise price, which approximates the fair value on the date of the grant. The shares vest in the employees over a period of five years and the employees can purchase the shares from the Trust over a period of ten years based on continued employment, until which, the Trust holds the shares for the benefit of the employees. The employees are entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees. On the acceptance of the offer, the selected employee undertakes to purchase the shares from the Trust within ten years from the date of acceptance of the offer. In case an employee resigns from employment, the rights relating to vested shares, which are eligible for exercise, may be purchased by the employee by payment of the exercise price whereas, the balance shares are forfeited in favour of the Trust. The Trustees have the right of recourse against the employees for any amounts that may remain unpaid on the shares accepted by them. As of the Balance Sheet date, the Trust has repaid the entire loan obtained from the Company on receipt of payments from employees against shares exercised. The Securities and Exchange Board of India (‘SEBI’) has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (‘SEBI guidelines’), which are applicable to stock purchase schemes for employees of all Indian listed companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognised in the books of account and amortised over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. A summary of the activity in the Company’s ESPS is as follows: Year ended Year ended March 31, 2011 March 31, 2010 Number of shares Number of shares Opening balance of unallocated shares 165,150 165,145 Shares forfeited during the year 992 5 Closing balance of unallocated shares 166,142 165,150 Opening balance of allocated shares 54,548 134,834 Shares exercised during the year (24,475) (80,281) Shares forfeited during the year (992) (5) Closing balance of allocated shares 29,081 54,548 Shares eligible for exercise 29,081 54,548 Shares not eligible for exercise – – Total allocated shares 29,081 54,548 Employee Stock Option Plan (‘ESOP’) Pursuant to ESOP scheme approved by the shareholders of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (“Scheme 2002”) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier). As per the Scheme 2002, each Oracle Financial Services Software – Annual Report 2010-2011


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    of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years. The employee pays the exercise price upon exercise of option. On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (“Scheme 2010”) for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 618,000 options. As per the Scheme 2010, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years. The employee pays the exercise price upon exercise of option. A summary of the activity in the Company’s ESOP (Scheme 2002) is as follows: Year ended March 31, 2011 Year ended March 31, 2010 Shares arising Weighted average Shares arising Weighted average from options exercise price (`) from options exercise price (`) Outstanding at beginning of year 242,382 1,152 348,853 1,075 Granted 60,000 2,333 – – Exercised (39,945) 1,255 (85,471) 819 Forfeited (16,600) 1,291 (21,000) 1,232 Outstanding at end of the year 245,837 1,414 242,382 1,152 Vested options 141,537 141,382 Unvested options 104,300 101,000 The weighted average share price for the year over which stock options were exercised was ` 2,188. A summary of the activity in the Company’s ESOP (Scheme 2010) is as follows: Year ended March 31, 2011 Year ended March 31, 2010 Shares arising Weighted average Shares arising Weighted average from options exercise price (`) from options exercise price (`) Outstanding at beginning of year – – – – Granted 618,000 2,050 – – Exercised – – – – Forfeited (56,135) 2,050 – – Outstanding at end of the year 561,865 2,050 – – Unvested options 561,865 – The details of options unvested and options vested and exercisable as on March 31, 2011 are as follows: Range of Shares Weighted average Weighted average exercise prices (`) exercise price (`) remaining contractual life (Years) Options unvested 1,291 – 1,291 44,300 1,291 5.1 2,050 – 2,050 561,865 2,050 9.4 2,333 – 2,333 60,000 2,333 9.6 Options vested and exercisable 265 – 265 31,400 265 0.9 515 – 515 32 515 2.3 1,291 – 1,291 110,105 1,291 5.1 807,702 1,856 8.3 The details of options unvested and options vested and exercisable as on March 31, 2010 were as follows: Range of exercise Shares Weighted average Weighted average prices (`) exercise price (`) remaining contractual life (Years) Options unvested 419 – 560 – – – 1,291 – 1,291 101,000 1,291 6.1 Options vested and exercisable 265 – 265 32,800 265 1.9 515 – 515 32 515 3.3 1,291 – 1,291 108,550 1,291 6.1 242,382 1,152 5.5 41


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    Analysis of our financial results Comparison of fiscal 2011 with fiscal 2010 Revenues Our total revenues in the fiscal year ended March 31, 2011, were ` 23,605.1 million, an increase of 5% over our total revenues of ` 22,434.7 million in the fiscal year ended March 31, 2010. The increase in revenues was primarily attributable to an increase in the revenues from our products business as well as services business. Products revenues Our products revenues in the fiscal year ended March 31, 2011, stood at ` 16,154.9 million, an increase of 4% over our products revenues of ` 15,475.4 million in the fiscal year ended March 31, 2010 on the strength of large customer wins in Europe and ASPAC. The revenues from license fees comprised 21% of the revenues, implementation and customisation fees comprised 53%, and Annual Maintenance Contracts comprised 26% of the revenues for the fiscal 2011. Services revenues Our services revenues represented 32% and 31% of our total revenues in the fiscal year ended March 31, 2011 and 2010. Our services revenues were ` 7,450.2 million in the fiscal year ended March 31, 2011 an increase of 7% from ` 6,959.3 million in the fiscal year ended March 31, 2010. Revenues from time and material contracts comprised 62% of services revenues and fixed price contracts comprised 38% for the fiscal 2011. Interest and other income (expense) Our interest and other income (expenses) in the fiscal year ended March 31, 2011, was ` 1,403 million, as compared to a loss of ` 682.7 million in the fiscal year ended March 31, 2010. The overall increase of ` 2,085.7 million in interest and other income (expenses) is primarily attributable to higher interest income of ` 684.1 million and net foreign exchange gain of ` 1,382.8 million during the year mainly due to realisation at better rates on conversion of EUR and USD funds to INR during the year. Cost of revenues and operating expenses Cost of revenues Our cost of revenues in the fiscal year ended March 31, 2011, was ` 11,606 million, a decrease of 1% over our cost of revenues of ` 11,734.7 million in the fiscal year ended March 31, 2010. Our cost of revenues as a percentage of total revenues was 49% in the fiscal year ended March 31, 2011 as compared to 52% in the fiscal year ended March 31, 2010. We have invested significantly both in our products and services businesses to meet emerging market requirements, and create a strong foundation for future growth. In the financial year 2010 – 2011, we continued to invest in enhancing our products. We announced the launch of Oracle FLEXCUBE 11.0 that helps financial institutions respond faster to market dynamics, define and track processes and ensure compliance. Our investments in the Oracle Analytics platform resulted in the launch of several new offerings for Enterprise Performance Management, Capital Management and Stress Testing. Our cost of products revenues in the fiscal year ended March 31, 2011, was ` 6,224.3 million, a decrease of 5% over our cost of products revenues of ` 6,559.7 million in the fiscal year ended March 31, 2010. Our cost of products revenues as a percentage of products revenues was 39% in the fiscal year ended March 31, 2011 as compared to 42% in the fiscal year ended March 31, 2010. Our cost of services revenues in the fiscal year ended March 31, 2011 was ` 5,381.7 million, an increase of 4% over our cost of services revenues of ` 5,175 million in the fiscal year ended March 31, 2010. The cost of services revenues as a percentage of services revenues was 72% in the fiscal year ended March 31, 2011 as compared to 74% in the fiscal year ended March 31, 2010. Sales and marketing expenses Our sales and marketing expenses in the fiscal year ended March 31, 2011, were ` 773.7 million, an increase of 73% over our sales and marketing expenses of ` 448.5 million in the fiscal year ended March 31, 2010. Our sales and marketing expenses as a percentage of total revenues was 3% for the fiscal year ended March 31, 2011 and 2% in the fiscal year ended March 31, 2010. Our sales and marketing expenses for our products business in the fiscal year ended March 31, 2011, were ` 661.1 million, an increase of 73% over our sales and marketing expenses for our products business of ` 382.6 million in the fiscal year ended March 31, 2010. Sales and marketing expenses for our products business as a percentage of products revenues was 4% for the fiscal year ended March 31, 2011 and 2% in the fiscal year ended March 31, 2010. Our sales and marketing expenses for our services business in the fiscal year ended March 31, 2011 were ` 112.6 million, an increase of 71% over our sales and marketing expenses for our services business of ` 65.9 million in the fiscal year ended March 31, 2010. Sales and marketing expenses for our services business as a percentage of services revenues was 2% for the fiscal year ended March 31, 2011 and 1% in the fiscal year ended March 31, 2010. Oracle Financial Services Software – Annual Report 2010-2011


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    General and administrative expenses Our general and administrative expenses in the fiscal year ended March 31, 2011 were ` 1,922.6 million, an increase of 12% over our general and administrative expenses of ` 1,721 million in the fiscal year ended March 31, 2010. Our general and administrative expenses as a percentage of total revenues was 8% in the fiscal year ended March 31, 2011 as well as in the fiscal year ended March 31, 2010. General and administrative expenses for our products business in the fiscal year ended March 31, 2011, were ` 640.7 million, an increase of 2% over general and administrative expenses for our products business of ` 628.4 million in the fiscal year ended March 31, 2010. Our general and administrative expenses for our products business as percentage of products revenues was 4% in both the fiscal years ended March 31, 2011 and March 31, 2010. General and administrative expenses for our services business in the fiscal year ended March 31, 2011, were ` 372.5 million, an increase of 9% over our general and administrative expenses for our services business of ` 340.6 million in the fiscal year ended March 31, 2010. Our general and administrative expenses for our services business as a percentage of services revenues was 5% in the both the fiscal years ended March 31, 2011 and March 31, 2010. Income taxes Our provision for income tax in the fiscal year ended March 31, 2011, was ` 664.1 million a decrease of 23% over our provision for income tax of ` 865.2 million in the fiscal year ended March 31, 2010. Our effective tax rate was 6% for the fiscal year ended March 31, 2011 as against 12% for the fiscal year ended March 31, 2010. Income from operations and net income As a result of the foregoing factors, income from operations increased by 10% to ` 8,966.3 million in fiscal 2011 from ` 8,156.4 million in fiscal 2010 and net income increased by 46% to ` 9,679.8 million in fiscal 2011 from ` 6,608.5 million in fiscal 2010. Our net income margin is 41% for the fiscal year 2011 as against 29% in the fiscal year 2010. We define net income margins for a particular period as the ratio of net income to total revenues during such period. Liquidity and capital resources Our capital requirement relate primarily to financing the growth of our business. We have historically financed the majority of our working capital, capital expenditure and other requirements through our operating cash flow. During fiscal 2011 and 2010 we generated cash from operations of ` 7,149.9 million and ` 6,927 million respectively. Oracle Financial Services Software is a zero debt company. We expect that our primary financing requirements in the future will be capital expenditure and working capital requirements in connection with the expansion of our business. We believe that the cash generated from operations will be sufficient to satisfy our currently foreseeable capital expenditure and working capital requirements. Human capital We recruit graduates from leading engineering and management institutions. We also hire functional experts from the banking industry. We had a net reduction of 636 employees during the fiscal year taking our employee strength to 8,447 employees as on March 31, 2011. The blend of functional knowledge and technical expertise, coupled with in-house training and real-life, experiences in working with financial institutions make our employees unique. We enjoy cordial relationships with our employees and endeavour to give them an excellent, professionally rewarding and enriching work environment. We operate an effective performance management system, with a focus on employee development. This measures key result areas, competencies and training requirements ensuring all-round employee development. Risks and concerns Quantitative and Qualitative Disclosures about Market Risk Our primary market risk exposures are due to the following: – foreign exchange rate fluctuations – fluctuations in interest rates – fluctuations in the value of our investments. As of March 31, 2011, we had Cash and Bank Balances of ` 25,380.3 million, out of which ` 24,328.5 million was in interest-bearing bank deposits. Consequently, we face an exposure on account of fluctuation in interest rates. These funds were mainly invested in bank deposits of longer maturity (more than 90 days) to earn a higher rate of interest income. 43


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    A substantial portion of our revenues is generated in foreign currencies, while a majority of our expenses are incurred in Indian Rupees and the balance in US Dollars and European currencies. Our functional currency for Indian operations is the Indian Rupee. We expect that the majority of our revenues will continue to be generated in foreign currencies for the foreseeable future and a significant portion of our expenses, including personnel costs and capital and operating expenditure, to continue to be incurred in Indian Rupees. In addition, we face normal business risks such as global competition and country risks pertaining to countries that we operate in. SWOT analysis Strengths: – Deep domain expertise with proven track record – Oracle Stack: Complete, Integrated and Open with all products benchmarked on Oracle Exadata – Unmatched solutions portfolio with depth of offering in the retail, corporate and investment banking, funds, cash management, trade, treasury, payments, lending, private wealth management, asset management and business analytics areas – Superior quality and cost-efficient, end-to-end service capability, from business consulting, to application development and deployment, IT management, to Business Process Outsourcing – Solutions built on best-in-class technology and architecture – Continued momentum in new customer additions – Extensive global client base – High quality manpower resources – Strong R&D capability – Acknowledged leadership in core banking, application services and governance, risk and compliance, Anti-Money laundering, operational risk and process outsourcing domains. Weaknesses: – Exposure to various economies – Lack of local resources in new markets/opportunities. Opportunities: – Increasing momentum in the acquisition of core banking systems by large and global financial institutions – Cross sell and Up sell opportunities into rich global customer base – Penetrate major geographies like China, Brazil, Japan, North America, Russia, LATAM and large parts of EMEA – Develop strong global Partner model, greatly expanding pipeline and delivery capabilities – Expanding solutions portfolio and entry into new market segments Consumer finance, business analytics, Basel II, Anti-Money Laundering, Private Wealth Management, Islamic banking, among others. Oracle Financial Services Software – Annual Report 2010-2011


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    Threats: – Competitive footprint in high-growth geographies – Accelerated demand for talent in India – Geo-political factors – Customers negotiating harder as the financial position in many markets has changed. Outlook The worldwide market for financial services is undergoing rapid transformation. Emerging markets are becoming increasingly significant sources of growth for firms in mature economies. New asset classes such as private equity and hedge funds have seen dramatic shifts in customer engagement and have altered the focus of capital markets. The payments space, a major source of revenues and profit for financial institutions, is being restructured, thus altering the fundamental dynamics of the banking industry. Over the last 36 months there have been significant changes in the economic environment. Your Company views the current economic scenario as an opportunity to help financial institutions meet their emerging business needs. To sustain their growth and profitability, global financial institutions will need to excel in areas such as offshoring, taxation and financial reporting, internal controls and service and process innovation. Financial institutions are also reviewing their existing IT investments to ensure that they are attuned to changing customer preferences and aligned to the new business priorities. Core banking, risk management and compliance, investor service and internet banking are among the areas that continue to show significant potential. Financial institutions are innovating using available technologies to offer services to their customers on a ‘self service’ basis. We see demand for core banking applications continuing as banks expand by buying the assets of other banks, establish presence in new countries or standardise applications across regions. Banks are looking at the centralisation of banking services such as account opening and origination of credit to improve their service levels, increase productivity and gain greater control over processes that are subject to regulatory scrutiny. Global regulators have re-emphasised the importance of stress testing in the measurement of liquidity and credit risk and in evaluating how banks would fare under different scenarios. As a result of these factors we have gained increasing traction at Tier 1 banks for our products. Over the last 12 months banks have also exhibited renewed interest in aligning finance, risk and performance applications. Risk Adjusted Performance Measurements (RAPM) that can manage such alignment, has received interest from many regulators and has also attracted attention from the boards of many banks. Oracle has been ranked number one in the banking space by an independent vendor and is committed to maintaining its leadership position in financial services. Oracle will continue to invest in expanding its banking footprint through its own internal R&D and also seek “best-in-class” acquisition targets. With a process-driven approach based on a Service-Oriented Architecture, your Company has the distinct advantage of offering banks the combined benefits of interoperability, extensibility and standardisation. Together with Oracle we provide a complete banking footprint, spanning all major distribution, manufacturing and corporate administration functions. Internal control systems and their adequacy The Company has in place adequate systems of internal control and documented procedures covering all financial and operating functions. These systems are designed to provide reasonable assurance with regard to maintaining proper accounting controls, monitoring economy and efficiency of operations, protecting assets from unauthorised use or losses and ensuring reliability of financial and operational information. The Company continuously strives to align all its processes and controls with global best practices. 45


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    Reconciliation Statement of profit as per Indian GAAP unconsolidated and Indian GAAP consolidated (All amounts in ` thousands) Year ended Year ended March 31, 2011 March 31, 2010 Net income as per Indian GAAP unconsolidated profit and loss account 9,679,797 6,608,488 Add: Revenue of subsidiaries, net Oracle Financial Services Software B.V. 7,842,305 7,851,792 Oracle Financial Services Software Pte. Ltd. – consolidated 6,776,215 5,536,927 Oracle Financial Services Software America, Inc. – consolidated 8,405,753 7,637,467 ISP Internet Mauritius Company – consolidated 346,288 533,061 Oracle (OFSS) Processing Services Limited 2,220 3,052 Oracle (OFSS) ASP Private Limited 43,414 82,403 Oracle Financial Services Software Chile Limitada 56,477 – Oracle Financial Services Software (Shanghai) Limited 395,742 228,440 23,868,414 21,873,142 Other income from subsidiaries, net 292,670 (240,245) 24,161,084 21,632,897 Less: Expenditure of subsidiaries, net Oracle Financial Services Software B.V. 7,244,795 7,186,992 Oracle Financial Services Software Pte. Ltd. – consolidated 6,677,527 5,304,107 Oracle Financial Services Software America, Inc. – consolidated 7,970,056 7,470,221 ISP Internet Mauritius Company – consolidated 311,144 359,917 Oracle (OFSS) Processing Services Limited (43,182) (90,508) Oracle (OFSS) ASP Private Limited 86,785 81,424 Oracle Financial Services Software Chile Limitada 121,290 – Oracle Financial Services Software (Shanghai) Limited 362,578 192,594 22,730,993 20,504,747 Net income as per Indian GAAP consolidated profit and loss account 11,109,888 7,736,638 Oracle Financial Services Software – Annual Report 2010-2011


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    Auditors’ report To The Members of Oracle Financial Services Software Limited 1. We have audited the attached balance sheet of Oracle Financial Services Software Limited (‘the Company’) as at March 31, 2011 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. 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. 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 required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘the Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (‘the Act’), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to 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 appears from our examination of those books; iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act. v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 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 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 the balance sheet, of the state of affairs of the Company as at March 31, 2011; b. in the case of the profit and loss account, of the profit for the year ended on that date; and c. in the case of cash flow statement, of the cash flows for the year ended on that date. For S. R. Batliboi & Associates Firm registration number: 101049W Chartered Accountants per Amit Majmudar Partner Membership No.: 36656 Mumbai, India May 10, 2011 47


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    Annexure referred to in paragraph 3 of our report of even date Re: Oracle Financial Services Software Limited (‘the Company’) i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b. Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. c. There was no disposal of a substantial part of fixed assets during the year. ii. Due to the nature of its business, clause 4 (ii) of the Order, relating to physical verification of inventory is not applicable to the Company. iii. a. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon. b. According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (e) to (g) of the Order are not applicable to the Company and hence not commented upon. iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets, sale of licenses and sale of services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. Due to the nature of its business, the Company does not purchase any inventory. v. In our opinion there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (v) of the Order is not applicable to the Company. vi. The Company has not accepted any deposits from the public. vii. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. viii. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company. ix. a. The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, cess and other material statutory dues applicable to it though there have been considerable delays in few cases of service tax, foreign taxes, income tax, value added tax and foreign withholding tax. As explained to us, the Company did not have any dues of excise duty. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Act, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same. b. According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other material statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows: Name of the Nature of the dues Amount (`) Period to which the Due Date Date of Payment statute amount relates Finance Service tax 5,860,482 April 2005 to September 2010 Various dates ` 3,143,505 is Act, 1994 paid on April 13, 2011 Foreign Tax Income Tax 169,444,499 April 2005 to August 2010 Various dates Not yet paid Value added Tax (‘VAT’) 23,858,629 April 2007 to March 2009 Various dates Not yet paid Withholding Tax 48,666,134 December 2008 to August 2010 Various dates Not yet paid Income Tax Income Tax 30,898,494 April 2007 to March 2008 August 19, 2009 Not yet paid Act, 1961 Oracle Financial Services Software – Annual Report 2010-2011

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