Section IV - DIRECTORS' REPORT
 
www.ftindia.com    
 
ANNEXURE “A” TO THE DIRECTORS’ REPORT
The Information required under Section 217(1)(e) of the Companies Act 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.
Conservation of Energy
Your Company is committed to the adoption of various energy saving methods for conservation of energy, and has taken adequate measures to use equipment, which would entail cost efficiency. It continues its endeavour to improve energy conservation and utilisation.
Technology Absorption, Research & Development
The Research & Development activity of your Company is mainly focused on the development of new software products to meet customers’ requirements. Since your Company operates in a sector, which witnesses rapid technological change and quality up-gradations, product improvement is given special attention.

The future plan of action also lays stress on the introduction of new Software products for both domestic and export markets.

Amount spent: Revenue Expenses Rs 120,741,352/-
Foreign Earnings & Outgo
The details of foreign exchange earnings and outgo are mentioned in Note 11(a) & 11(b) of Schedule 15 II on significant accounting policies and notes to the accounts.
 
ANNEXURE ‘B’ TO THE DIRECTORS’ REPORT
Pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“the SEBI Guidelines”), following disclosures are made in connection with the “Financial Technologies (India) Ltd. – Employee Stock Option Scheme 2005 and Employee Stock Option Scheme 2006”.
 
Sr. No. Description ESOP - 2005 ESOP - 2006*
1 Options granted 440,000 440,000
2 Exercise price per option Rs 981.60 per share Rs 1,812.70 per share
  (The exercise price of the option is the market price of the shares
as defined under the SEBI Guidelines, as on the grant date) 		   
3 Options vested 440,000 440,000
4 Options exercised 211,890 Nil
5 Options lapsed/forfeited 20,685 440,000
6 Variations of terms of options None None
7 Money realised by exercise Rs 207,991,224 Nil
8 Options in force 207,425 Nil
9 Employee wise details of options granted –    
  i) Senior Management Personnel Mr. V. Hariharan,
Mr. Shreekant Javalgekar, Mr. Arshad Khan,
Mr. Paras Ajmera,
Mr. Hariraj Chouhan		 Mr. V. Hariharan,
Mr. Paras Ajmera,
Mr. Miten Mehta
  ii) Employees who receive a grant in any one year of option     amounting to 5% or more of options granted during that year Nil Mr. V. Hariharan,
Mr. Paras Ajmera
  iii) Employees to whom options equal to or exceeding 1% of the       issued capital have been granted during the year Nil Nil
10 Diluted EPS 80.33 208.10
11 Fair value of the options 483.88 547.29
12 The Company has followed the intrinsic value-based method of accounting for stock options granted after 1st April 2005, based on Guidance Note on Accounting for Employees Share-based payments, issued by the Institute of Chartered Accountants of India. Had the compensation cost of the Company’s stock based compensation plan been determined in the manner consistent with the fair value approach as described in the Guidance Note, the impact on Company’s net profit and EPS would be:
The Company’s Net Profit for the year would be higher by Rs 181,460,227 and earning per share as reported would be indicated as below:
Adjusted EPS Rs
- Basic 84.29
- Diluted 84.29
13 Description of the method and significant assumptions used during the year to estimate the fair values of the options, including the following weighted average information:    
  i) Expected volatility 64.48% to 86.41% 48.05% to 57.74%
  ii) Option life 3 years 2 years
  iii) Dividend yield 0.41% 0.49%
  iv) Risk-free interest rate 5.98% to 6.41% 7.48% to 7.50%
  To allow for the effects of early exercise, it is assumed that the employees would exercise the options after vesting date. Expected volatility is based on the historic volatility of the share price over the period that is commensurate with the expected term of options.    
 
* During the year, the ESOP 2006 Scheme was cancelled.