Company's Philosophy on Corporate Governance
Datamatics believes that ethical corporate governance practices enables creation of a corporate culture of consciences and consciousness, transparency and openness. Datamatics’ philosophy on corporate governance is to enable the management to direct and control the affairs of the Company in an efficient manner and to achieve the Company’s goal of maximizing value for all its shareholders as well as the other stakeholders such as customers, suppliers, employees, the government and to the society at large.

Board of Directors
The current strength of the Board is nine members, comprising of three Executive Directors and six Non-Executive Directors. Of the nine Directors, five are Independent Directors.

Board Meetings
Seven Board Meetings were held during the financial year ended March 31, 2007, and the gap between the two meetings did not exceed four months. The dates on which the Board meetings were held are as follows:

May 22, 2006; July 26, 2006; October 19, 2006; January 24, 2007; January 31, 2007; February 21, 2007 and March 23, 2007.

The particulars of the Directors, their attendance and other directorship, membership of committees are given below:

Name	Designation	Category	Attendance		*Other Directorships	Other Committee Memberships$	Committees’ chairmanship
			Board Meeting	Last AGM
Dr. Lalit S. Kanodia	Chairman & Whole time director	Promoter Executive	5	Yes	7	Nil	Nil
Rahul L. Kanodia **	Vice Chairman & CEO	Non-Independent Executive	0	NA	5	Nil	Nil
Manish H. Modi ***	Managing Director & CEO	Non-Independent Executive	6	Yes	Nil	Nil	Nil
Vidur Bhogilal	Executive Director & CFO	Non-Independent Executive	7	Yes	1	Nil	Nil
R. K. Saraswat	Director	Independent Non-executive	4	Yes	2	1	1
Shahzaad Dalal	Director	Independent Non-executive	5	Yes	12	8	4
Sudhir Deshpande	Director	Independent Non-executive	7	Yes	Nil	Nil	Nil
Asha L. Kanodia	Director	Promoter Non-executive	4	No	Nil	Nil	Nil
Habil Khorakiwala	Director	Independent Non-executive	0	No	6	1	Nil
Prof Dr. Uday Salunkhe	Director	Independent Non-executive	6	Yes	Nil	Nil	Nil

* Alternate directorship, directorship in private limited companies, foreign companies and membership in governing councils, chambers and other bodies not included.
** Mr. Rahul L. Kanodia was appointed as Vice Chairman & CEO w.e.f. 22nd February 2007.
***Mr. Manish Modi resigned from the Board and also as Managing Director w.e.f. 21st February 2007.
$ Only membership in Audit Committee and Shareholders Grievance Committee included.

Appointment/Re-appointment of Directors
The Directors who retire by rotation and who are eligible for re-appointment or newly appointed are:

i) Dr. Lalit S. Kanodia *
Dr. Lalit Kanodia received his B. Tech. (Hons.) from IIT, Mumbai. He completed his MBA and consequently Ph.D. in Management from the Massachusetts Institute of Technology, USA. He taught statistical decision theory at MIT during 1964-65. He was also the visiting faculty for MBA students at the Jamnalal Bajaj Institute of Management, Mumbai during 1968-1970.

Dr. Kanodia has won a Ford Foundation Fellowship (on the basis of national selection in the USA) for his Ph.D. He won the distinguished Alumnus Award of IIT, Mumbai at their 25th Anniversary Celebration in 1983 for “Entrepreneurship” from the President of India and was awarded Order of Merit for Management and honored as Samajshree, by the Council of Management Executives, in recognition of services rendered to the public, on May 21, 1994. Dr. Kanodia was included by Dataquest, an Indian computer magazine, in their January 1995 issue, as one of the 10 persons in their “Hall of Fame”.

He has served as a President of the Management Consultants Association of India and is a member on various committees and councils. He has traveled extensively worldwide for over three decades.

He has held the post of Consultant to the Ford Motor Company and Arthur D. Little, USA. Prior to founding the Datamatics Group, Dr. Lalit Kanodia worked with Tata Consultancy Services Limited and, held overall charge of the organization for the period 1968 to 1969.

Dr. Kanodia started the Datamatics Group in 1975, and is currently the Chairman of this group. He is also the committee member of SEEMA (Santacruz Electronic Export Manufacturers Association). He is on the board of several listed companies.

Dr. Kanodia is also the Consul General of Chile in India.

Dr. Lalit S. Kanodia is also a director in the following companies: -

Datamatics Ltd.
RPG Life Sciences Ltd.
Datamatics Intercon Ltd.
SOFTBPO Global Services Ltd.
Datamatics Infotech Inc.
Datamatics Software Services Ltd.
Datamatics Softworld Ltd.
Datamatics Technologies UK Ltd.
Datamatics Software Solution Ltd.
Datamatics Technologies Inc.

As on date Dr. Lalit S. Kanodia holds 38,320 equity shares of the Company.

ii) Mr. Vidur V. Bhogilal *
Mr. Vidur V. Bhogilal is a qualified Chartered Accountant (CA) and Cost Accountant (ICWA) from India & Certified Public Accountant (CPA) from the U.S. He is also a law graduate. Mr. Bhogilal stood first in India in the CPA Examination. He was also a rank holder in the CA and ICWA examinations. He was awarded a gold medal for securing the highest scores in the ICWA final examination for the Quantitative Techniques and Management Information Systems subject. He has over 15 years of rich experience in audit, taxation, accounting, legal and acquisitions. Mr. Bhogilal has earlier held the post of Chief Financial Officer (CFO) of Datamatics Technologies Inc., a wholly owned subsidiary of Datamatics Technologies Limited. During his tenure with Datamatics Technologies Inc. he was actively involved in acquisitions of US companies and had played a key role in the merger of the US entities. He has also worked with JM Morgan Stanley and Arthur Anderson, amongst other organizations.

Mr. Vidur V. Bhogilal is also a director in the following companies:

Datamatics Softworld Ltd.
Datamatics Technologies Inc.

As on date Mr. Vidur V. Bhogilal holds 2,500 equity shares of the Company.

iii) Mr. Rahul L. Kanodia *
Mr. Rahul L. Kanodia is a Commerce graduate from Mumbai and holds B.S degree (Computer MIS) from Babson College U.S.A. He also holds an MBA degree from Columbia University, New York (Business Strategies). After a brief stint at the UN office in the US, Mr. Rahul Kanodia has been working with Datamatics since 1987. His lateral approach led Datamatics to enter into strategic alliances with several leading companies. It is these initiatives that resulted in Datamatics harnessing the power of Information Technology into opportunities for growth. He has also initiated organizational restructuring and financial re-engineering to aid growth. Mr. Rahul Kanodia has won several awards including the Indo-American Society's (IAS) Young Achiever 2001 award, the Special Executive Magistrates' Society (1999), and the Omega Roh Honors Society award (1991).

Mr. Rahul L. Kanodia is a director in the following Companies:

Datamatics Ltd.
Datamatics Software Services Ltd.
Datamatics Software Solution Ltd.
Datamatics Softworld Ltd.
Datamatics intercon Ltd.
Datamatics Infotech Inc.
Datamatics Australia Pty. Ltd.
Datamatics America Inc.
Datamatics Technologies, Inc.
Datamatics Technologies UK Ltd.

As on date Mr. Rahul L. Kanodia holds 72 equity shares of the Company.

*Alternate directorship, directorship in private limited companies and membership in governing councils, chambers and other bodies not included.

Audit Committee
The Board has constituted an Audit Committee comprising of three Directors, all of whom are Independent Non-Executive Directors. Ms. Divya Kumat, Secretary of the Company acts as the secretary of the Audit Committee.

During the financial year ended March 31, 2007, four Audit Committee meetings were held respectively on May 22, 2006, July 26, 2006, October 19, 2006 and January 31, 2007. The number of meetings attended by each member are as follows:

Committee Members	Designation	No. of Meetings attended
Mr. R. K. Saraswat	Chairman	4
Mr. Shahzaad Dalal	Member	2
Mr. Sudhir Deshpande	Member	4

The role of the Audit Committee is to monitor and provide effective supervision of the Company’s financial reporting process with a view to ensure that the financial statements are accurate, sufficient and credible.

The terms of reference of the audit committee as defined by the Board are:

a.	The scope of the Audit Committee includes: i. Review of financial statements before they are submitted to the Board for adoption. ii. Recommending the appointment or removal of statutory auditors, fixation of audit fees and approval for payment for other services provided by the auditors. iii. iii. Review of quarterly, half yearly and yearly financial statements before they are presented to the Board, focusing inter alia upon – Accounting Policies and any changes thereto. Ensuring compliance with the Accounting Standards. Compliance with the laws, rules, regulations and notification issued by the Stock Exchange and other regulatory authorities relating to the preparation and disclosure of financial statements. Qualifications in draft audit report. Significant issues arising out of audit. The going concern assumption. Major accounting entries based upon exercise of judgment by the management. Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interest of the Company at large.
b.	Review with the management, auditors the adequacy of internal control systems.
c.	Discussions with the Statutory Auditors on matters relating to internal controls, periodic financial statements and any significant findings and follow up thereon.
d.	Discussion with the Statutory Auditors before commencement of the audit, nature and scope of audit, as well as post audit discussion to ascertain any area of concern.
e.	Review of the Company's financial and risk management policies.
f.	Examine reasons for default in payment of interest and repayment of principal amounts to depositors and debenture holders, payment of dividend, payments to creditors and payment of all statutory dues in the prescribed time period.
g.	Investigating the reasons for substantial defaults, if any, in the payment to the depositors, shareholders (in case of non-payment of declared dividends), and creditors.

Remuneration/Compensation Committee
The Remuneration / Compensation Committee of the Board comprise of four directors of the Company, of which three are independent directors and one is non-independent. Mr. Sudhir Deshpande (Independent Director) is the Chairman of this Committee. The other members of the Committee are Dr. Lalit S. Kanodia (Non-independent), Mr. Shahzaad Dalal, and Prof Dr. Uday Salunkhe.

The Committee has been entrusted with following responsibility:

During the year ended March 31, 2007, five remuneration committee meetings were held viz. May 22, 2006, July 26, 2006, August 18, 2006, February 21, 2007 and March 30, 2007. The numbers of meetings attended by each member were as follows:

Committee Members	Designation	No. of Meetings attended
Dr. Lalit S. Kanodia	Chairman	4
Mr. Shahzaad Dalal	Member	5
Prof Dr. Uday Salunkhe	Member	5
Mr. Sudhir Deshpande *	Member	1 (Out of 1)

*Mr. Sudhir Deshpande was appointed as a member of remuneration/compensation committee on February 21, 2007.

Non-Executive Directors
The Company paid sitting fees of Rs. 5000/- per board and audit committee meeting to the non-executive directors of the Company. With effect from February 21, 2007 the sitting fees for attending the Board Meeting was increased to Rs. 10,000/-. Apart from the sitting fees, the Company also pays commission to all non-executive Directors within the limits prescribed under the Companies Act, 1956 and as approved by the shareholders. Shareholders in their annual general meeting held on June 28, 2005 have approved the limit of 0.25% of the net profits of the Company computed in the manner laid down in Section 198 read with Sections 349 and 350 of the Companies Act, 1956 to be paid as commission to all the non-executive directors of the Company. The total commission payable for the financial year ended March 31, 2007 amounted to Rs. 594,000/- and was paid as under: -

Name of Director	Commission (Rs.)
Mr. Shahzaad Dalal	150,000
Mr. Sudhir Deshpande	100,000
Mr. R. K. Saraswat	100,000
Mrs. Asha L. Kanodia	64,000
Mr. Habil Khorakiwala	70,000
Prof Dr. Uday Salunkhe	110,000

Details of the number of shares held by all the non-executive directors of the Company:

Name of the Director	No. of equity shares held (As on May 26, 2007 )
Mr. Shahzaad Dalal	2,000
Mr. Sudhir Deshpande	Nil
Mrs. Asha L. Kanodia	26,820
Mr. Habil Khorakiwala	Nil
Prof Dr. Uday Salunkhe	Nil
Mr. R. K. Saraswat	1,000

No convertible instruments/employee stock options have been granted by the Company to the non-executive directors of the Company.

Executive Directors

Dr. Lalit S. Kanodia
Dr. Lalit S. Kanodia was appointed as a Whole-time Director of the Company effective May 16, 2005 for a period of five years. Dr. Lalit S. Kanodia being a promoter of the Company is not eligible to participate in the employee stock option schemes of the Company.

Mr. Rahul L. Kanodia
Mr. Rahul L. Kanodia was appointed as a Vice Chairman & CEO of the Company for a period of five years effective from February 22, 2007. He is not eligible to participate in the employee stock option scheme of the Company.

Mr. Manish Modi £
Mr. Manish Modi was appointed as a Managing Director of the Company for a period of five years effective 1st July, 2002. Mr. Manish H. Modi has been granted 75,000 options under the Company’s Key Employee Stock Option Plan 2005 on April 30, 2005. These options vest over a period of fifteen months. During the year ended March 31, 2007, 75,000 options were vested, which have been exercised on August 18, 2006.

Mr. Manish Modi resigned from the post of Managing Director and from the Board of Directors with effect from February 21, 2007.

Mr. Vidur Bhogilal
Mr. Vidur Bhogilal was appointed as an Executive Director & Chief Financial Officer of the Company for a period of three years effective May 12, 2005. He is not eligible to participate in the employee stock option scheme of the Company.

Following are the details of the remuneration paid to the executive directors of the Company during the year ended March 31, 2007:

(Amount in Rs.)
Particulars	Dr. Lalit S. Kanodia	Mr. Manish H. Modi [***]	Mr. Vidur V. Bhogilal	Mr. Rahul L. Kanodia [**]
Salary	540,000	4,837,808	2,872,800	187,500
Estimated monetary value of perquisites	1,188,400	1,794,918	2,720,428	88,125
Commission*	2,377,000	2,377,000	0	0
Provident Fund Contribution & other Funds	0	387,379	0	0
Total	4,105,400	9,397,105	5,593,228	275,625

*Commission relates to the financial year ended March 31, 2006, which was paid during the year 2006-2007.
** Mr. Rahul L. Kanodia was appointed w.e.f. February 22, 2007
***Mr. Manish Modi resigned from the Board and also as Managing Director w.e.f. 21st February 2007.

Shareholders' Grievance Committee
The Board has constituted a Shareholder's Grievance Committee, consisting of two non-executive, independent directors - Mr. R. K. Saraswat and Mr. Sudhir Deshpande. Mr. R. K. Saraswat is the Chairman of the Committee. Ms. Divya Kumat is the Compliance officer. During the year ended March 31, 2007 the Company received 41 complaints. None were pending resolution as on March 31, 2007.

General Body Meetings

Annual General Meetings

a. Location, time and date where last three Annual General Meetings were held are given below:

Financial Year	Date	Time	Venue
2003-04	June 24, 2004	11.00 a.m.	Yashwantrao Chavan Pratishthan Auditorium, Y.B. Chavan Centre, General Jagannath Bhosale Marg, Nariman Point, Mumbai 400 021.
2004-05	June 28, 2005	11.00 a.m.	Knowledge Center, Plot No. 58, MIDC, Andheri (E), Mumbai 400 093.
2005-06	July 26, 2006	11.30 a.m.	Knowledge Center, Plot No. 58, MIDC, Andheri (E), Mumbai 400 093.

b. The following Special Resolutions were passed at the previous three Annual General Meetings:

1.	AGM held on June 24, 2004: i. Resolution for ratification of Employee Stock Option Plan 2004, under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999.
2.	AGM held on June 28, 2005: i. Resolution for revising the limit of commission to be paid to the non-executive directors of the Company.
3.	3. AGM held on June 26, 2006: i. Resolution for revising the remuneration of Mr. Sameer Kanodia, who is a relative of Dr. Lalit S. Kanodia, Mrs. Asha L. Kanodia and Mr. Vidur V. Bhogilal, directors of the Company.

The special resolutions moved at all the above meetings were passed on a show of hands by the shareholders present at the meeting and not by postal ballot. No special resolution is proposed to be conducted by postal ballot.

8. Management Discussion & Analysis Report
The Management Discussion & Analysis Report for the year ended March 2007 is published separately in this Report.

Other Disclosures
Related party transactions, utilisation of proceeds of public issue have been disclosed in the annual report.

The Company has complied with all the statutory formalities.

The Company does not have a whistle blower policy.

A Risk Management Policy covering Risk Assessment & Minimization procedure was presented before the Board in its meeting held on 26th May, 2007. The same is approved for implementation

The Company has laid down a “Datamatics - Code of Conduct” for the members of Board of Directors and the Senior Management. The Code has being posted on the website of the Company. All the Board members and Senior Management personnel have affirmed compliance with the code for the year 2007. A declaration to this effect signed by the CEO is given in this report.

The CEO & CFO have certified to the Board with reference to the Financial Statement and other matters as required in clause 49 of the listing agreement.

Means of Communications
The financial results of the Company are published in The Business Standard and Sakal. The financial results are displayed on the Company's website - www.datamaticstech.com. The Management Discussion and Analysis Report is given separately in this Annual Report.

General Shareholders' information