Dear Shareholders,

Emerging as a Global Enterprise

The year 2005-06 was exciting and eventful for your Company, which, by enlarging its global delivery footprint and blending its core competencies residing in its various units, transformed itself into a global enterprise in the IT/ITES-BPO space. In line with its vision of becoming a Global Player and leader in its core business, the Company grew in terms of number of clients, employee size and fortification of its delivery platforms in India, Philippines, USA, Canada and Mauritius.

I had informed you in my last year’s message that we planned to make HTMT a Global Delivery IT/BPO Company. Helped by our acquisitions, we have largely achieved this aim by setting up delivery centers in USA, Canada, Philippines and a Business Continuity Centre in Mauritius. Our new business delivery model, creates value for our Global clients and also positions your Company as a truly Emerging Global Enterprise.

Business Environment

The Indian economy with a GDP growth of 8% in the year 2005-06 remained one f the fastest growing economies of the world, with virtually all sectors registering an all round growth. The ITES-BPO industry globally has grown at a robust pace and in India, the growth has been even more impressive. Independent research shows that the Global BPO market is expected to touch US$ 55 billion by 2010, with India expecting to garner at least US$ 25 billion.

The Industry is also expected to witness substantial consolidation in the near future. This will be driven by the need to gain scale, consolidate service lines and acquire capabilities to move up the value chain. Your Company is also looking at this route to achieve its long-term growth plans-resources being less of a constraint in today’s scenario.

The recent security lapses with a few players in the industry highlight the need for ramping up security measures to sustain client confidence. Security and quality continue to play a major role in your Company maintaining a leadership position in the BPO market and this has resulted in good client references and endorsements as also objective validation of its competitive strength.

Your Company got accredited for US-HIPAA (Health Insurance Portability and Accountability Act) compliance during the year under review to meet the security requirement of its health insurance clients. The Company is also closely monitoring its compliance with the stringent security standard BS 7799.

While India does not have specific laws on privacy and data protection, there are proxy laws and other indirect safeguards that provide adequate protection to companies offshoring work. The Government of India is proactively strengthening the existing legal system to cover data protection issues to enhance the confidence level of outsourcing foreign Companies.

According to NASSCOM Strategic Review 2006, India has the single largest pool of suitable offshore talent-accounting for 28% of the total suitable pools available across all offshore destinations and outpacing the shares of the other destinations-making it as a premier destination for offshore technology services.

It is essential that adequate regulations are in place for maintaining quality in our educational institutions so that the supply of skilled resources to the pool is not affected. The Government also needs to cope with the imbalance in geographical distribution of technical institutions, which are now concentrated in Southern India.

Performance

HTMT continued with its quest to be a global force in the BPO industry. We at HTMT believe that in order to continue to be a force to reckon with, your Company needs to have a low client concentration and enhance your Company’s depth in domains, technologies processes and talents. It is this strategy that guides HTMT in all activities and processes on a day-to-day basis.

With this vision in place, your Company was able to achieve a top line growth of 53%, thanks mainly to Team HTMT with its innovative ideas and practices coupled with their determination to achieve. Your Company also leveraged its association with the Hinduja Group and their capabilities substantially during the year, as relevant.

IndusInd Media and Communications Ltd. (IMCL), the media flagship arm of your Company, spearhead the reintroduction of Conditional Access System (CAS). CAS enables customers to pick and choose for individual channels of their own choice and involves installation of highly sophisticated digital technology and provision of Set Top Box to customers. The Government of India suspended the implementation of CAS and after a prolonged legal battle a notification has been introduced to ensure that CAS is reintroduced from January 1, 2007 compulsorily in certain metros. IMCL is working with other members of the MSO Alliance with TRAI/Government to ensure fair and transparent regulations enabling MSOs to compete with emerging new technologies on a level playing field.

HR Policy

The HR polices of your Company kept pace with the requirement of the industry. The stock option plan announced by your Company was a result of such positive HR initiatives. The newly introduced incentive plan also motivated employees to perform their best and surpass their targets.

The pro-active policy has led to widening of the bandwidth of distributed leadership, growing nimbleness to manage change, deepening of insight into client businesses and rapid assimilation of their processes. Above all, it has helped to create a fair and meritocratic organization.

Outlook

The global BPO business is estimated to grow unabatedly in the years to come as the best Companies look to outsourcing as a tool to win, innovative faster and more cheaply in order to grow large and gain market share. The abundance of skilled resources, cost benefits and highly quality delivery will continue to be an advantage for countries like India and Philippines to attract the outsourcing business.

The outsourcing opportunities are now extending beyond the lower and customer relationship management services and back office work into high-end knowledge process outsourcing. Companies like yours, with high management bandwidth, capability to invest significantly and ability to ensure consistent quality will capitalize on the emerging trend and enlarge their global delivery footprint.

As already announced, your Company is shortly poised to start restructuring all its businesses initially by demerging its BPO/ITES division. Your Company has also during this year divested its valuable stake in Hutchison Essar Limited. This has unlocked shareholders value and will enable your Company to strengthen its existing core businesses and grow rapidly through organic and inorganic growth.

In the circumstances stated, your Company possessing world-class infrastructure supported by deeply committed and highly skilled people will emerge as winning global enterprise with centers of excellence in different countries.

I take this opportunity to thank all stakeholders and particularly our customers for the support extended to, and faith reposed in, the HTMT team. I also wish to thank all my colleagues for their relentless support and hard work throughout the year without which we would not have progressed so far in such challenging times.