इंफॉर्मेशन टेक्नोलॉजी

 
 
 Your directors are pleased to present the Twenty Fifth Annual Report,
 together with the Audited Statements of Accounts of the Company for the
 year ended 31st. August 2001.
 
 HIGHLIGHTS OF THE YEAR
 
 * On 6th April, 2001, your Company was assessed at SE/- CMM Level 5,
 which is the highest level of the Capability Maturity Model of Software
 Engineering Institute, Carnegie Mellon University, USA. This puts your
 company in the select league of only 25 companies worldwide who have
 this prestigious certification to their credit.
 
 * Your company won the prestigious Golden Peacock Innovation Management
 Award for the year 2000 from the World Congress on Total Quality.
 
 * The company worked jointly with Accenture (erstwhile Andersen
 Consulting) to evolve a strategy to tap the global Mobile Computing
 market.
 
 * The service portfolio of your Company has been broadened to cover
 provisioning of Managed Services to its global client base. The
 services are being offered both on-site, at the client premises, as
 well as off-shore, from our development center in New Delhi.
 
 * A new sales and marketing set up was established in UAE to tap the
 growing market in the gulf region. Marketing strength was increased in
 UK, USA and Australia.
 
 FINANCIAL HIGHLIGHTS
 
                                                     (Rs. in Million)
                                                 2000-01        1999-00
                                             (15 months)    (12 months)
 
 Sales                                          1976.38         2320.43
 Other Income                                      2.38           51.92
 Operating Profit (PBIDT)                        505.21          754.62
 Interest                                         20.20            7.90
 Depreciation                                     84.85           43.60
 Profit before Tax                               400.17          703.12
 Provision for Diminution on Investment          368.72            0.04
 Provision for Tax                              
 Profit after Tax                                 31.45          703.08
 Excess Provision of Dividend
 written back                                     71.78            2.38
 Prior Period Items                             (171.11)            -
 Balance available for appropriation             (67.88)         705.46
 Transfer to Debenture                              -               -
 Redemption Reserve                               20.00
 Transfer to General Reserve                        -               -
 Earning per share in Rs.(E.P.S.)
 of equivalent Face Value of Rs.5/- each.          0.22            5.06
 
 
 DIVIDEND
 
 During the year under review, due to the overall decrease in profits
 and provision for diminution of investment, no dividend is recommended
 by the Directors for this year.
 
 PERFORMANCE DURING THE YEAR
 
 The performance of your company was affected due to the bursting of the
 dot COM bubble in the United States of America.  During the boom
 period, ITIL had not only invested heavily in its own dot COM ventures,
 but also had many other dot COM companies as its clients. As the
 venture capitalists started backing off from these ventures, the fund
 flow completely stopped and ITIL had no option but to abandon the
 projects midway.  Most of these dot COM clients of ITIL do not even
 exist now.  Apart from bringing down the revenues of companies like
 ITIL heavily, large-scale retrenchments and closures across the globe
 has also impacted the future prospects as the market got flooded with
 consultants, who are willing to pick up a job at any price.
 
 One of the major cost-cutting measures resorted to by most of the
 organizations worldwide was a majortoning down of their IT budgets.
 Some of ITIL's customers reduced their IT expenditure in the current
 fiscal heavily. Some projects have been scrapped altogether, while
 others have been downsized or delayed.
 
 The on-going price war has brought down the profitability of the Indian
 IT ventures considerably.  AII IT companies, big or small, have been
 affected by this slump and are out in the cut-throat market with
 unheard of price tags. At ITIL, we have been forced to reduce our
 rates substantially, and thus, despite all our cost-cutting measures,
 we have seen a major dip in profitability.
 
 We are seeing a large number of multinationals, including some of
 ITIL's existing clients in the domestic market, setting up their own
 offices in India to tap the large pool of talent available here, to
 serve their IT needs. This has dried up the requirements from these
 companies. The remaining domestic market, which had started looking at
 IT investment seriously, has again adopted a wait-and-watch approach
 towards the new technological advancements.
 
 Apart from the cut-throat competition from their peers in the Indian
 market, the Indian IT companies are facing tough competition from some
 other countries as well. Countries like China, Philippines, Russia and
 others are already making major headway as potential IT power houses.
 As such, labor cost in these countries is less than in India and we
 shall be unable to fight the price war with them. The only way we can
 retain our leadership position is by positioning ourselves at the
 higher end of the services market. ITIL is rapidly therefore
 positioning itself in the up market value chain.
 
 COST CUTTING MEASURES
 
 ITIL has taken the adverse economic scenario as an opportunity to
 realign the business goals and make itself lean and flexible.  The
 operations have been put under microscope to assess their viability in
 view of the emerging trends globally. Development centers set up at
 Goa, Calcutta and Pune for serving the growing e-commerce market have
 either been downsized or merged with the Delhi headquarter for a better
 financial and operational control.
 
 THE WAY AHEAD
 
 In its continuous endeavour to look at ways and means to move up the
 value chain, ITIL has concentrated on building its own Intellectual
 Property as well as to get into hitherto uncharted waters like
 Consulting, Systems Integration, Managed Services, and so on.
 
 Unlike most of the other Indian IT companies, ITIL has been striving to
 build domain knowledge of various sectors and at the same time get into
 more end-to-end projects rather than just body shop. Research shows
 that there shall continue to be a vast gap between demand and supply
 and ITIL is positioned to leverage this opportunity.
 
 CORE COMPETENCIES
 
 Software Development Services
 
 Your Company provides on-site and offshore software development
 services to its clients worldwide. It has successfully executed several
 projects for both existing and new clients in the current year.
 
 Your Company has major plans for the next year. It plans to expand its
 business opportunities and reach into other countries with opening of
 new offices in the US, Middle East, and Australian nations. These
 offices would take care of the marketing activities of the Company's
 on-site and offshore software development capabilities.
 
 Your Company has already started marketing its capabilities and
 services to explore the new technological areas. ITIL's advantage would
 be the strengths in the high-end technological areas, and the company
 would capitalize on those strengths to procure business in both the
 existing and new technological areas.
 
 Product Development
 
 Your Company has dedicated teams, constantly involved in the
 development of new software products for Palmtop, Handheld and Desktop
 PCs. Currently the Company's products are sold only through its
 websites but it is moving towards providing off-the-shelf products,
 especially in the area of Mobile Computing, SMS and WAP.
 
 Managed Services
 
 This is a completely new area your Company has forayed into.  Managing
 and monitoring mission-critical IT operations in an increasingly
 complex environment is becoming crucial for stability of any
 organization. In the emerging economic scenario, the focus is clearly
 on controlling the size of operations and implementing innovative means
 of utilizing available resources in the. most cost-effective manner.
 One of the measures being widely adopted by most organizations is
 outsourcing of their IT operations to Managed Service Providers who can
 not only execute the services, but also manage and monitor them
 effectively.
 
 Over the past few months, ITIL has geared up to deliver the full
 spectrum of managed services to meet all the application needs of our
 clients. ITIL is delivering scalable, world-class infrastructure and
 application-specific services to ensure that Quality and delivery
 expectations are met across the varied client base.
 
 Mobile Computing
 
 A joint team from world-renowned management consultants, Accenture
 (known earlier as Andersen Consulting) and ITIL has identified Mobile
 Computing as key area for growth and profitability as mobile computing
 is likely to see large-scale growth. Worldwide, currently 200 million
 Internet users and 400 million mobile users can be tapped with mobile
 computing, Mobile Computing is fast emerging as the key focus area for
 communications for companies worldwide. Your Company is one of the
 earliest players in India who started R & D in Mobile Computing and
 today the investment made is poised to pay rich returns.  
 
 INFRASTRUCTURE FACILITIES
 
 The employees of your Company work on the latest hardware and software
 platforms, which enhance their output and productivity. The Company has
 its software development center with state-of-the-art facilities at New
 Delhi.
 
 OVERSEAS MARKETING ACTIVITIES
 
 Your Company has a strong presence abroad to cater to the worldwide
 software requirements through its own offices or joint venture
 companies in Australia, Canada, Finland, UAE, UK and USA.
 
 As part of expansion of marketing activities, your Company has already
 placed its Business Development Managers in these countries. Your
 Company further plans to set-up new overseas offices in Singapore and
 Germany. Negotiations are already on in these countries and operations
 are going to start soon.
 
 HUMAN RESOURCES DEVELOPMENT
 
 During the year, your Company reviewed its manpower position and has
 also downsized its employee strength. Currently it is employing
 qualified and experienced manpower of about 250 employees including
 Software, technical, marketing and finance professionals. The company
 has got sound back-up of its training programs for upgradation of
 skills on the latest development in software technologies.
 
 ITIL has got consistent HR system in place so as to ensure that it
 recruits and retains the best and the brightest. This commitment
 includes training Company's professionals in the industry's best
 training programs, establishing performance-based and
 compensation-based transparent system with vibrant and open culture
 where achievers thrive, and communicating with each other and with our
 clients more candidly than ever before.
 
 RESEARCH AND DEVELOPMENT
 
 To keep pace with the new technologies, a dedicated team for R&D has
 also been set up by the Company. This team comprises of experienced and
 qualified professionals. Currently a large investment has been made in
 the latest technologies of SMS and WAP since it has experienced
 impressive membership growth comprising the leading players in wireless
 communications technologies, mobile computing, mobile services and
 other software development and services. The mission of the platform
 and the Forum that has developed it is to provide a universal standard
 for accessing Internet content and value-added services using wireless
 devices such as mobile phones, pagers, personal digital assistants
 (PDAs) and other wireless terminals.
 
 QUALITY
 
 Your Company achieved the highest level in quality certification on
 April 6th, 2001. ITIL was assessed at the Optimized Level of Maturity
 (Level 5) of Capability Maturity Model (CMM) developed by the Software
 Engineering Institute (SEI) of the Carnegie Mellon University, USA.
 This is a major step further in the direction of excellence. The
 foundation for a good Quality System at ITIL was laid by ISO 9001
 Certification that the company had obtained in June, 1997.  
 
 ITIL has its own Quality Assurance Group and has also hired KPMG as a
 third party Quality Consultant. All the software projects and product
 development work strictly adhere to the defined quality procedures
 Apart from the external Quality audits, internal audits are the regular
 features of your Company.
 
 In January 2001, the World Congress on Total Quality picked up your
 Company for the prestigious Golden Peacock Innovation Management Award
 for the year 2000, from amongst a select list of software and services
 companies.
 
 FINANCE
 
 Capital
 
 1. During the year the Company has made preferential allotment of
 18,395 fully paid equity shares of Rs.5/- at a premium of Rs. 810/- per
 share, in accordance with SEBI Guidelines to the following
 
 * 13,615 equity shares of Rs.5/- each allotted at a premium of Rs.
 810/- per share to Arush Exports Pvt. Ltd.
 
 * 3,435 equity shares of Rs.5/- each allotted at a premium of Rs. 810/-
 per share to Atlas Television Pvt. Ltd.
 
 * 1,345 equity shares of Rs.5/- each allotted at a premium of Rs. 810/-
 per share to Atlas Flora Pvt. Ltd.
 
 DIRECTORS
 
 Mr. Gagan Oberoi, who was appointed as Additional Director of the
 company during year, retires at this Annual General Meeting and being
 eligible, offer themselves for appointment as Directors.
 
 The Company has received notices under Section 257 of the Companies
 Act, 1956 from members of the Company signifying their intention to
 propose the appointment of Mr. Gagan Oberoi as directors of the
 Company.
 
 Mr. Manoj Srivastava, Whole time Director of the company has been
 appointed as Managing Director of the company w.e.f 28th September
 2001.
 
 During the period under review, Mr. K. D. Agarwal, Mr. Surendra Singh
 have ceased to be Directors of the Company. The Directors wish to place
 on record their appreciation for the valuable services and guidance
 rendered by these directors during their tenure as Directors of the
 Company.
 
 Mr. V. C. Rai, Dr. R. C. Vaish, Mr. Amit Rai and Mr. Suresh Sachdev,
 Directors retire by rotation at the forthcoming Annual General Meeting.
 The Board recommend their re-appointment as all being eligible for
 re-appointment, at the said Annual General Meeting of the Company.
 
 RESPONSIBILTY STATEMENT OF THE BOARD OF DIRECTORS.
 
 Pursuant to the requirement under section 217 (2AA) of the Companies
 Act 1956, with respect to the Director's Responsibility Statement, it
 is hereby confirmed that:
 
 (i) that in the preparation of the annual accounts for the financial
 year ended 31st August 2001, the applicable accounting standards had
 been followed along with proper explanation relating to material
 departures;
 
 (ii) The directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that were reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company at the end of the financial year and of the profits of
 the company for the period under review.
 
 (iii) The directors had 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
 
 (iv) The directors had prepared the accounts for the financial year
 ending 31st August 2001, on a going concern basis.
 
 PERSONNEL
 
 Relevant particulars pursuant to Section 217(2A) of the Companies Act,
 1956 are given as Annexure to this report.
 
 CONSERVATION OF ENERGY
 
 The Company is engaged mainly in development and export of software and
 not in any manufacturing activity nor has it acquired any technology
 for absorption in this area. Hence, no details as required under
 Section 217 (1) (e) of the Companies Act, 1956 and the Rules framed
 thereunder have been given.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 During the year under review, the Company earned Rs. 638.65 millions
 and used Rs. 23.69 millions of foreign exchange in its operations.
 
 SUBSIDIARIES
 
 As required under Section 212 of the Companies Act, 1956, the Audited
 Statement of Accounts of Usha, Inc., ITIL Inc., ITIL Australia Pty.
 Ltd, Palmix Information Technologies Inc., India i2i Inc., and Yonie
 inc., for their respective year ended for the financial year 2000-2001
 together with Reports of the Auditors thereon are annexed.
 
 During the year under review the Company has disinvested its equity
 stake in Apex Infotech Ltd. and ITIL Online Ltd.
 
 AUDITORS
 
 M/s Bansal & Co. the Auditors of the Company will hold office till the
 conclusion of this Annual General Meeting, and being eligible, offer
 themselves for re-appointment.
 
 EMPLOYEES STOCK OPTIONS
 
 During the year the company made no grant to its employees under its
 the Employees Stock Option Scheme (ESOS).
 
 AUDITORS QUALIFICATION
 
 With reference to the qualification in the Auditors' report reference
 is invited to Note no.3 of the Notes to the accounts which is self
 explanatory
 
 CORPORATE GOVERNANCE
 
 The Company is following the various recommendations of the code of
 Corporate Governance as prescribed by the statute and the listing
 agreement. The Audit Committee constituted by the company comprises of
 three Directors namely Mr. Suresh Sachdev, Dr. M.C. Gupta and Prof.
 R.C. Vaish.
 
 PUBLIC DEPOSITS
 
 As at 31st August, 2001, there were no deposits which had become due
 for repayment and remained unclaimed or unpaid.
 
 ACKNOWLEDGEMENT
 
 Your directors take this opportunity to thank the bankers to the
 company, various Financial Institutions, customers and its suppliers
 for their continued support and services. Your Directors acknowledge
 the commitment and contribution of all employees to the growth of the
 Company.
 
 Your Directors are specially thankful to the esteemed shareholders for
 their support and encouragement which has enabled the company to
 venture into various projects successfully.
 
                             For and on behalf of the Board of Directors
                               INFORMATION TECHNOLOGIES (INDIA) LIMITED
 
 Place : New Delhi                                  (VINAY RAI)
 Dated : 13.11.2001                                   CHAIRMAN