Kale Annual Report 05 06

Contents
Board of Directors Letter to Shareholders .......................................... 2

Narendra Kale Chairman Financial Highlights .............................................. 4
Vipul Jain Managing Director
Directors’ Report .................................................... 6
K.K. Nohria Director
Management Discussion and Analysis .............. 21
Prabhakar Deodhar Director
Pravin Gandhi Director Kale’s Social Initiative .......................................... 31
Auditor’s Report ................................................... 33
Auditor
Financial Statements ........................................... 36
M/s. D.G. Kurundwadkar Chartered Accountant
Consolidated Financial Statements ................... 53
Company Secretary Financial Statements of Subsidiaries ................ 66
Ninad Umranikar Kale Softech, Inc.
Kale Consultants Australia Pty. Ltd.
Bankers
State Bank of India Antah Kale Sdn. Bhd.
Citibank N.A. Kale Technologies Ltd.
ABN AMRO Bank N.V. Synetairos Technologies Ltd.
The Hongkong and Shanghai Banking Corporation Ltd.
Shareholder Information .................................. 121
ICICI Bank Ltd.
AGM Notice ......................................................... 125
Barclays Bank Plc.
Registered Office
Kale Enclave, 685/2B & 2C,
1st Floor, Sharada Arcade,
Satara Road,
Pune – 411 037
Tel. No. +91 20 6608 3777
Fax No. +91 20 2423 1639
Website : www.kaleconsultants.com
Registrar and
Share Transfer Agent
Karvy Computershare Pvt. Ltd.,
“Karvy House” 46, Avenue 4,
Street No. 1, Banjara Hills,
Hyderabad-500 034
Tel. : +91-40-2342 0818
Fax : +91-40-2342 0814
KALE CONSULTANTS LIMITED 1

Letter to Shareholders
Greatness is not in where we stand, but in what direction we are moving.

We must sail sometimes with the wind and sometimes against it
— but sail we must and not drift, nor lie at anchor.
- Oliver Wendell Holmes
All through our existence since the last 20 years, Kale has believed in
winning for our customers, our employees, our shareholders and the
society at large. We have geared up, not only to meet present
challenges, but also future challenges as the future is but a couple of
days away from yesterday.
Our journey has been hard and we have made some short term
sacrifices in order to get long term gains to build a business capable
of sustained growth and profitability. This has meant that our share
holders have had to be patient. Vipul Jain
Managing Director
The most direct demonstration of keeping the faith in an organization is the people. As
long as you align your business with the interest of your customers and you have a team
of passionate and committed people, you have to keep faith in them, empower them and
what you will see is growth and tangible business and financial results.
2005-06 was a year which demonstrated the value of keeping the faith for Kale and all its
stakeholders. The benefit of focused strategy coupled with continuously improving
execution has begun to reflect in our business results. Kale, today is financially a healthier
organization and at the tipping point in our corporate development.
We have always pursued our belief in our mission and strategy. A cornerstone of our mission
is globally to be one of the top three providers of choice in the markets that we serve
through innovation, modern technology and global outsourcing. To complete this mission,
we have pursued the strategy of becoming a complete solutions provider to the travel &
transportation industry.
At Kale, we are proud to have built a culture on anticipating and understanding our
customer’s needs and then working in close partnership with the customers to make their
business stronger – more productive, more profitable, more capable of capturing market
opportunities – and thus more valuable. The fact that approximately 85% of our revenue
in 2005-06 came from existing customers clearly demonstrates their recognition of the
value we bring to their business.
2 KALE CONSULTANTS LIMITED
Letter to Shareholders
Customers need a partner who not only “speaks the language” of their business, but also
provides leadership on their key competitive issues. Kale has a vertical focus and therefore,
we have built deep domain expertise and insight into the industry challenges and
opportunities. Kale has also perfected the Global Delivery Model that leverages the high
quality resource base in India and yet ensures quality delivery to customers across the
world.
Looking ahead to 2006 and beyond, we continue to see healthy, growing demand of our
solutions and services. The industry is returning to a more normal growth pattern after
the shocks that began in 2001. The theme for the airline industry as very well articulated
by IATA is to “Simplify the Business” and thereby reduce costs and gain operational flexibility.
Kale’s solutions help customers achieve precisely these goals – the revenue accounting
portfolio helps airlines to reduce back office processing costs and prevent revenue losses.
The cargo solution suite delivers end-to-end process management capability to enable
the business to increase cargo yields, enhance customer service and reduce transaction
processing costs and delays. Kale’s Managed Process Services enables customers to
outsource their business process and focus on their strategic business drivers. The growth
of internet travel sales has been phenomenal presenting huge opportunity as never before.
Kale is well-positioned to benefit from this industry dynamic, having invested in expanding
our portfolio of services, adding highly capable and motivated team members, deepening
our industry expertise and broadening our geographic footprint.
The road ahead is exciting and challenging. But challenge is what we relish – as it helps
us rekindle our passion to build a company that will win for its stakeholders. We will
strive to live up to the faith that you have vested in us.
I thank you all for the confidence and trust you have in Kale. I along with Team Kale will
endeavor to work towards achieving the leadership position that we desire, and you as
stakeholders deserve.
Vipul Jain
Managing Director

Financial Highlights
Total Revenue
642.87
700
Rs. In Million
600
505.99
500
400 Revenue increased by 27%

2004-05 2005-06
Operating Expenses
462.99
500
450
Rs. In Million
386.14
400
350
Operating Expenses increased by 20%
300
2004-05 2005-06
PBIDT
179.88
200
Rs. In Million
150 119 .85
100
50
PBIDT increased by 50%
2004-05 2005-06
Depreciation and Amortisation Cost
125
100.32
Rs. In Million
100
74.76
75
50 Depreciation and Amortisation Cost increased by 34%

2004 -05 2005 -06

Financial Highlights
Operating PBT
69.62
70
60
Rs. In Million
50 36.72
40
30
Operating Profit Before Tax increased by 90%
20
2004-05 2005-06
Performance Indicators
Rs. in Million
Sr. No. Particulars 2001-02 2002-03 2003-04 2004-05 2005-06
1 Total Revenue 504.59 507.01 481.37 505.99 642.87
2 Operating Revenue 495.31 499.48 463.63 492.92 625.84
3 PBIDT 94.59 108.27 109.41 119.86 179.88
4 Operating PBT 20.27 31.92 31.67 36.72 69.62
5 PAT 20.26 31.42 31.66 7.52 64.84
6 Net Fixed Assets 380.98 394.10 350.20 359.75 419.97
7 Borrowings 86.56 97.82 150.56 166.49 120.85
8 Equity Capital 114.99 115.00 116.00 116.83 128.46
9 Net Worth 518.50 541.17 555.46 540.41 629.29
10 Capital Employed 605.06 638.99 706.02 706.90 750.14
11 EPS - Diluted (Rs) 1.76 2.73 2.75 0.10 5.17

Directors’ Report
To,
The Members,
Your Directors present the Twentieth Report on the Business and Operations of your Company for the year ended 31st March, 2006.
Financial Results Rs. in Million

Particulars 2005 – 2006 2004 – 2005
Total Revenue
- Domestic ............................................................................................... 118.05 68.80
- Export ..................................................................................................... 507.79 424.12
- Other Income ...................................................................................... 17.03 13.07
Total ......................................................................................... 642.87 505.99

Total Expenditure ................................................................... 462.99 386.14
PBIDT ....................................................................................... 179.88 119.85
Interest ........................................................................................................... 9.94 8.37
Depreciation and Goodwill .................................................................... 44.11 29.62
Amortisation of Product Cost ............................................................... 56.21 45.14
Profit Before Tax and Provision for Diminution in the Value
of Investments ........................................................................ 69.62 36.72
Provision for Diminution in Value of Investments ......................... – 29.19
Profit Before Tax ..................................................................... 69.62 7.53
Provision for Tax ......................................................................................... 1.78 0.01
Provision for Fringe Benefit Tax ............................................................ 3.00 –
Profit After Tax ........................................................................ 64.84 7.52
Add/(Less) : Prior Period Items .............................................................. 1.27 (6.26)
Profit brought forward from earlier year .......................................... 83.39 82.13
Profit available for appropriation ........................................ 149.50 83.39
Appropriations:
- Transferred to/(from) General Reserves .................................... 1.62 –
- Proposed Dividend ............................................................................ 16.06 –
- Dividend Tax ........................................................................................ 2.25 –
- Balance Transferred to Balance Sheet ........................................ 129.57 83.39
Dividend
Your Directors are pleased to recommend a dividend of Rs. 1.25 per equity share for the financial year ended 31st March, 2006. The
dividend, if approved, will be paid to those members whose names appear in the Register of Members as on the date of the
ensuing Annual General Meeting.
Overview
Your Directors are pleased to report your Company’s remarkable improvement in terms of revenues and net margins during the
year under review.
This year the Company has consolidated its position as a very strong and major player in the Travel and Transportation vertical.
The year has also seen an encouraging response from global customers to your Company’s initiative in the Travel and Transportation
industry.
The business outlook for the Travel and Transportation industry has improved this year and your Company was well prepared to
focus on the global opportunities. Your Company is the only India-based software player with a complete integrated suite of
solutions and services for Revenue Accounting and Cargo Management, two most important functions in the airline industry.
As a focused global player in the Travel & Transportation industry, your Company has proved to be a strategic long-term partner
for its customers.
Directors’ Report
Operations
During the year under review, your Company recorded revenues of Rs. 642.87 million against Rs. 505.99 million in the previous
year, an increase of 27.05% over the previous year. Revenues from sale of software products and services grew 26.96% to Rs
625.84 million in 2005-06 from Rs. 492.92 million in 2004-05. Export revenues rose to Rs 507.79 million from Rs. 424.12 million in
the previous year, a growth of 19.73%.
Operating expenditure stood at Rs 462.99 million as against Rs. 386.14 million during the previous year, an increase of 19.90%.
The operating margins increased by 50.08% to Rs. 179.88 million from Rs. 119.86 million. Profit after tax for the current year has
increased to Rs. 64.84 from Rs. 7.52 million in the previous year, an upsurge of 762.23%.
Customer Acquisitions
Cebu Pacific, the “on time, great value” airline from Philippines has signed a five-year contract with the Company for REVERA™,
the comprehensive Passenger Revenue Accounting Solutions.
During the year, the Company also bagged an order from Bangkok Airways and has signed a five-year contract for REVERA™.
With REVERA™, Bangkok Airways will be able to reduce the per unit transaction cost while ensuring increased throughput and
timely, actionable MIS to senior and top management. REVERA™ has been successfully implemented at Bangkok Airways and
the airline has commenced operations.
The Company has signed an agreement with a leading airline in Europe for the implementation of Revenue Accounting Solutions.
Managed Process Services (Kale MPS™)
Kale MPSTM which includes End-to-End Revenue Accounting, Revenue Recovery and Protection Service (RRPS) and Cargo Sales
Audit, has shown increased growth potential during the year adding 4 new customers. The total number of customers has increased
to 14.
The revenues generated by Kale MPSTM grew by 21.87% from Rs. 224.92 million during the previous year to Rs. 274.11million.
CSP™ - The year in perspective
Last year, your Company globally launched CSP™ - Modern Integrated Enterprise-Wide Cargo Solution. CSP™ has established
itself as a leading software solution for cargo carriers within the first year of its release. The first year of CSPTM saw remarkable
growth in terms of revenue generation, customer acquisition and retention.
The solution which was globally launched in June, 2004, today has two of the world’s top 20 airlines as its customers and enjoys
the credit of being a modern end-to-end cargo solution in the market.
Asiana Airlines, one of the top 20 cargo airlines and a CSP™ user since December 2003, has reinstated its faith in the solution by
renewing its contract with the Company.
During the year under review, the Company also signed a five year contract with Indian Airlines, one of the largest regional
airlines in Asia for CSP™ - Modern Integrated Enterprise-Wide Cargo Solution. The Company would provide complete CSP™ suite
on a hosted basis to Indian Airlines. The solution will be used by the airline’s entire domestic and international network and
includes the provision and maintenance of equipment at Indian Airlines’ stations.
Amalgamation
The Company has received permission from the Honorable High Court of Judicature at Bombay on 15th July, 2005 to amalgam-
ate Kale eTravel Technologies Limited (“Kale eTravel”), a wholly owned subsidiary of the Company, with the Company with effect
from 1st April, 2005. Kale eTravel was engaged in the business of development of software for Travel industry. The amalgamation
has enabled your Company to provide total travel related solutions, reduce cost of operation, stimulate development of inte-
grated software and acquire competitive edge.
Subsidiaries
As a result of the amalgamation of Kale eTravel Technologies Limited (“Kale eTravel”), formerly known as Cognosys Software
Limited, with the Company, Kale Technologies Limited which was earlier the wholly owned subsidiary of Kale eTravel, has be-
come direct wholly owned subsidiary of the Company with effect from 1st April, 2005.
Directors
Mr. Narendra Kale - Chairman retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for
reappointment.
Mr. Narendra Kale, 54, is M. Tech. in Computer Science from I.I.T., Kanpur and Advanced Management program from Harvard
University, USA. He is one of the best known IT experts in the country. Over the years Mr. Kale grew to become a recognised
expert in the sphere of IT and more particularly in bank automation, where he was a respected member of various committees at
the industry level. Mr. Kale was a consultant to the Computerisation Committee of the Indian Banks Association. He was also a

Directors’ Report
member of the Rangarajan Committee for computerisation of Banks. He has participated in several other Committees / Working
Groups at the Reserve Bank of India and the Indian Banks Association.
Mr. Narendra Kale is a director in the following companies:
Public Limited Companies Other Bodies Corporate
Kale Consultants Limited Kale Softech, Inc.
Antah Kale Sdn. Bhd.
Mr. Kale holds 1,015,000 equity shares of the Company.

Auditors
M/s. D. G. Kurundwadkar, Chartered Accountant, Auditor of the Company, retires at the ensuing Annual General Meeting and
being eligible, offers himself for reappointment.
Directors’ Responsibility Statement
Your Directors confirm that –
• in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper
explanation relating to material departures.
• the directors had 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 or loss of the Company for that period.
• the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities.
• the directors had prepared the annual accounts on a going concern basis.
Human Resource
During the year under review, the Remuneration and Compensation Committee of the Board granted 185,000 options under
Kale Consultants Limited Employee Stock Option Scheme - 2003. Following are the details required to be given under the SEBI
(Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999:
a) Options granted A total number of 185,000 options were granted during the year.
b) Pricing formula Exercise price for the stock options is decided by the Remuneration
and Compensation Committee (“the Committee”). So far, the
Committee has granted options at the closing market price on the
National Stock Exchange on the date of grant of options. The price
is payable at the time of exercise of options.
c) Options vested A total number of 983,211 options have vested. Out of these vested
options, 70,022 options have lapsed till 31st March, 2006.
d) Options exercised A total number of 546,090 options have been exercised till 31st
March, 2006.
e) The total number of shares arising as a result The options exercised till 31st March, 2006 have given rise to
of exercise of options 546,090 equity shares.
f ) Options lapsed Till date 399,496 options have lapsed. As per the ESOP Scheme,
these options shall be pooled back and may be granted at the
discretion of the Remuneration and Compensation Committee to
any Eligible Employee as defined in the ESOP Scheme.

Directors’ Report
g) Variation of terms of options At the nineteenth Annual General Meeting a special resolution was
passed amending :
a) the definition of Exercise Price. According to the revised definition,
“Exercise Price” means the Market Price on the date of grant or such
other price as the Remuneration and Compensation Committee of
the Board of Directors may, in its absolute discretion decide and that
the exercise price may differ in respect of options that may be granted
in each tranche.
b) the clause pertaining to Vesting Period. According to the revised
Clause 10.3 (a) of the Kale Consultants Limited Employees Stock
Option Scheme 2003:The Remuneration and Compensation
Committee of the Board of Directors shall have sole discretion to
decide the vesting period. The vesting period may vary from
employee to employee in respect of options that may be granted in
one tranche.
A special resolution was also passed enabling the Remuneration and
Compensation Committee of the Board of Directors to grant options
exceeding 1% of the paid up equity share capital of the Company
during any one year to Mr. Ashish Malhotra, CEO and Director of Kale
Softech, Inc., USA, the wholly owned subsidiary of the Company, under
Kale Consultants Limited Employees Stock Option Scheme, 2003.
h) Money realised by exercise of options During the year, Rs. 16,545,011.29 have been realised till 31st March,
2006 by exercise of options.
i) Total number of options in force As on date, a total number of 868,353 options are in force.
j) Employee-wise details of Options granted to

i) Senior managerial personnel Anand Khare, Ashish Malhotra, Ashish Nanda, Ashley Goldsworthy,
Chandrashekhar Karmarkar, Kashmira Irani, K. K. Nohria, Mahesh
Shah, Michael Lappen, Neela Bhattacherjee, Prakash Alkutkar, P. S.
Deodhar, Rajnish Kapur, Satish Ambe and Sumeet Nadkar.
ii) Any other employee who receives a grant Mr. Ashish Malhotra.
in any one year of option amounting to 5%
or more of options granted during that year
iii) Identified employees who were granted Mr. Ashish Malhotra has been granted options exceeding 1% of
exceeding 1% of the issued capital the issued capital of the Company at the date of grant.
(excluding outstanding warrants and conver-
sions) of the Company at the time of grant
k) Diluted Earnings Per Share (EPS) pursuant to Rs. 5.17

issue of shares on exercise of option calculated
in accordance with International Accounting
Standard (IAS) 33

Directors’ Report
Weighted average exercise price of Options granted during the year whose
a) Exercise price equals market price 91.36

b) Exercise price is greater than market price Nil
c) Exercise price is less than market price Nil
Weighted average fair value of Options granted during the year whose
a) Exercise price equals market price 95.64
b) Exercise price is greater than market price Nil
c) Exercise price is less than market price Nil
The stock-based compensation cost calculated as per the intrinsic value method for the financial year 2005-06 is Rs. Nil. If the stock-
based compensation cost was calculated as per the fair value method prescribed by SEBI, the total cost to be recognised in the
financial statements for the year 2005-06 would be Rs. 791,885. The effect of adopting the fair value method on the net income and
earnings per share is presented below:
Pro Forma Adjusted Net Income and Earnings Per Share

Particulars Amount in Rs.
Net Income
As Reported 64,842,955
Add: Intrinsic Value Compensation Cost –
Less: Fair Value Compensation Cost 791,885
Adjusted Pro Forma Net Income 64,051,070
Earning Per Share: Basic

As Reported 5.33
Adjusted Pro Forma 5.26
Earning Per Share: Diluted

As Reported 5.17
Adjusted Pro Forma 5.11
Method and Assumptions used to estimate the fair value of options granted during the year
Fair value has been calculated using the Binomial Method.

Assumptions used in the calculation are given below:
Variables Date of Grant

16th May, 2005 24th January, 2006
1 Risk Free Interest Rate 6% 6%

2 Expected Life 3 years 3 years
3 Expected Volatility 50% 50%
4 Dividend Yield Ignored Ignored
5 Price of the underlying share in market at 85.00 101.80
the time of grant of options (Rs.)

Directors’ Report
Corporate Governance
A report on Corporate Governance is set out separately, which forms part of this report.
Fixed Deposits
During the year your Company has not accepted fixed deposits from the public.
Particulars of Employees
As required under the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 as amended, the names and other particulars of employees are set out in the annexure, which forms part of this
report.
Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars prescribed under clause (e) of subsection (1) of section 217 of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the annexure which forms part of this
report.
Acknowledgement
Your directors extend their gratitude to all investors, clients, vendors, banks, financial institutions, regulatory and governmental
authorities and stock exchanges for their continued support during the year.
The directors place on record their appreciation of contribution made by the employees at all levels for their dedicated and
committed efforts during the year.
For and on behalf of the Board of Directors
Narendra Kale Vipul Jain

Place : Mumbai Chairman Managing Director
Date : 25th April, 2006

12
Annexure to Directors’ Report
STATEMENT AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975
Sr. Name Designation Qualification Age Date of Experience Gross Last

No. (Years) commencement (Years) Remuneration Employment
of employment (Rs.)
1 Chris Dubois Vice President - European M.A (Hons), Diploma in Management 60 16.01.2001 38 7,134,927 Speedwing International
Airlines Division Studies Ltd.
2 David Oxman (*) Senior Consultant B. Tech 55 15.10.2001 32 3,427,808 Sytengra
3 Graham Wilson (*) Senior Manager - Sales B.A (Hons) 55 05.01.2004 22 3,555,885 Amadeus Services Ltd.
4 Guy Hescott Vice President 1 A Level, 3 O Level 46 02.04.2001 27 5,193,595 Speedwing International
Ltd.
5 Jilly Ferrero (*) Account Manager Certificate in Business Development 47 01.02.2001 28 521,373 Hamptons
6 Murugadas Lead Analyst B.E (E & E) 29 17.11.2003 7 1,341,213 DSQ Software Ltd.
Pandurangan (*)
7 Peter O’Sullivan Vice President B.Sc 50 26.09.2000 26 7,018,234 Speedwing International
Ltd.
8 Rajaram Subramaniam (*) Lead Analyst B.E (Computers) 27 01.11.2003 6 2,590,018 Allserve Systems Plc.
9 Rangan Bhaumik Consultant B.Tech 33 16.11.2000 9 4,077,637 Mindtech
10 Stewart Aylott (*) Project Manager 7 O Level 46 09.10.2000 27 3,005,212 Speedwing International
Ltd.
11 Vipul Jain Managing Director B.Tech, PGDBM (IIMA) 49 01.11.1986 26 4,940,740 Tata Administrative
Services
12 Rajnish Kapur Executive Vice President B.E (Computer Science) 42 01.05.2004 16 3,895,063 Xansa (IIS Infotech)
13 Abhijeet Barad (*) Lead Analyst B.E (Computer Science) 27 24.07.2000 6 3,098,013 –
14 Kalpesh Shah (*) Lead Analyst B.E (Computer Science) 27 24.07.2000 6 910,653 Digitek Technologies
15 Kaustubh Dighe (*) Lead Analyst B. Com, PGD in Computer Applications 28 01.03.2001 8 1,243,299 Blue Chip Computer
Consultants Pvt. Ltd.
16 Sandra Armstrong (*) Administration Manager GCSE ‘O’ Level 41 03.05.2005 10 1,642,492 Dalkia Energy &
Technical Services
(*) Employed part of the year
KALE CONSULTANTS LIMITED

Conservation of Energy
The range of activities of your Company require minimal energy consumption and every endeavour has been made to ensure
optimal utilization of energy and avoid wastage through automation and deployment of energy-efficient equipments.
Your Company takes adequate measures to reduce energy consumption by using efficient computer terminals and by using
latest technology. The impact of these efforts has enhanced energy efficiency. As energy cost forms a very small part of total
expenses, the financial impact of these measures is not material and measured.
Technology Absorption
Your Company, in its endeavour to obtain and deliver the best, adopts the best technology in the field, upgrades itself continu-
ously.
Research and Development (R&D)

Your Company has a well-equipped Research and Development team carrying on research and development activities.
The total expenditure incurred on Research and Development during the year 2005-06 was Rs. 72.04 million.
Foreign exchange earning and outgo

The details of foreign exchange earnings and outgo are given in Note No. 3 of Schedule 16 – Significant Accounting Policies and
Notes to Accounts, forming part of the financial statements.
Narendra Kale Vipul Jain

Place : Mumbai Chairman Managing Director

Corporate Governance
Your Company believes that good corporate governance enhances accountability and increases shareholder value. Good corporate
governance has been an integral part of the Company’s philosophy. The Company believes that good corporate governance
should be an internally driven need and is not to be looked upon as an issue of compliance dictated by statutory requirements.
The Company is focussed on good governance, which is a key driver of sustainable growth and enhanced shareholder value.
The Certificate of Corporate Governance from the Statutory Auditors of the Company confirming compliance of the conditions
of Corporate Governance is annexed hereto.
Board Composition
The Company has optimum combination of executive and non – executive directors with more than fifty per cent of the Board
comprising of non – executive directors.
Board Meetings
Five Board Meetings were held during the financial year 2005-06.
Name of Director Designation Category Other Directorships / Board Committees

(Number)
Directorships Committee Committee
Membership Chairmanship
Mr. Narendra Kale Chairman Non-Executive 3 1 1
(Promoter)
Mr. Vipul Jain Managing Executive 6 1 –
Director (Promoter)
Mr. K.K. Nohria Director Independent and
Non-Executive
Director 22 3 1
Mr. Prabhakar Deodhar Director Independent and
Non-Executive
Director 10 2 2
Mr. Pravin Gandhi Director Independent and
Non-Executive
Director 14 2 –
Dates of Board Meetings

16th May, 2005
25th July, 2005
05th September, 2005
25th October, 2005
24th January, 2006

Attendance at Board Meetings, last Annual General Meeting and Extra Ordinary General Meeting
Name of Director No. of Board Attendance at AGM

Meetings Attended held on 5th September, 2005
Mr. Narendra Kale 5 Yes

Mr. Vipul Jain 4 Yes
Mr. K. K. Nohria 3 Yes
Mr. Prabhakar Deodhar 4 Yes
Mr. Pravin Gandhi 4 No
Board Committees
Currently the Board has four Committees –

a) Audit Committee
b) Investor Grievance Committee
c) Remuneration and Compensation Committee
d) Share Transfer Committee
None of the Directors of the Company is a member of more than 10 committees or acts as a Chairman of more than five committees
across all companies in which he is a Director.
Composition of Committees
a) Audit Committee
Four meetings of the Committee were held during the financial year 2005-06.
Name of Director Category No. of Meetings Attended
Mr. K. K. Nohria (*) Independent Director 2

Mr. Prabhakar Deodhar Independent Director 4
Mr. Pravin Gandhi Independent Director 3
(*) Chairman of the Committee
Terms of Reference
a. to oversee financial reporting and disclosure process.
b. to recommend the appointment and removal of statutory auditors, decide their remuneration and approval for payment
for any other services.
c. to review financial results and statements before submission to the Board, focusing primarily on –
any changes in accounting policies and practices.
major accounting entries based on exercise of judgment by management.
Qualifications in the draft audit report.
significant adjustments arising out of audit.
going concern assumption.
compliance with Accounting Standards.
compliance with stock exchange and legal requirements concerning financial statements.
any related party transactions i.e. transactions of the Company of a material nature, with promoters or the
management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company
at large.

d. to oversee adequacy of internal control systems.

e. reviewing adequacy of internal audit function, including the structure of the internal audit, staffing and seniority of the
executive heading the internal audit function, reporting structure, coverage and frequency of internal audit.
f. discussion with internal auditors of any significant findings in their reports and follow up thereon.
g. reviewing 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.
h. discussions with external auditors before the audit commences, as regards nature and scope of audit as well as have post-
audit discussions to ascertain any areas of concern.
i. reviewing the Company’s financial and risk management policies.
j. to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders and
creditors.
b) Investor Grievance Committee

Four meetings of the Committee were held during the financial year 2005-06.
Mr. Prabhakar Deodhar (*) Independent Director 4

Mr. Narendra Kale Promoter 4
Mr. Vipul Jain Promoter 3
Mr. K. K. Nohria Independent Director 2
Terms of Reference
To monitor investor complaints by obtaining monthly reports from the Registrar and Share Transfer Agent.
Name and Designation of Compliance Officer

Ninad G. Umranikar – Company Secretary
c) Remuneration and Compensation Committee

Three meetings of the Committee were held during the financial year 2005-06.
Mr. Narendra Kale (*) Promoter 3

Mr. Prabhakar Deodhar Independent Director 3
Mr. K.K. Nohria Independent Director 1
Mr. Pravin Gandhi Independent Director 3
Terms of Reference
The Committee reviews the remuneration payable to directors and the senior officers of the Company and decides matters
pertaining to Employees Stock Options.
Remuneration Policy
Remuneration to Managing Director is paid in accordance with the provisions of the Companies Act, 1956. Commission is
paid to Managing Director and to independent non-executive directors at a specified percentage of the net profits of the
Company. Sitting Fees are paid to independent non-executive directors for attending every meeting of the Board of Direc-
tors or committee thereof (other than Share Transfer Committee).

Remuneration to Managing Director

At the nineteenth Annual General Meeting of the Company held on 5th September, 2005, the shareholders had passed a
special resolution, subject to the approval of the Central Government, for increase in remuneration of Mr. Vipul Jain. The
Central Government, vide its letter no. 2/68/2005-CL.VII dated 30th November, 2005 approved increase in remuneration of
Mr. Vipul Jain. Based on the approval received from the Central Government, following remuneration was paid to Mr. Vipul
Jain for the financial year 2005-06:
Remuneration to Mr. Vipul Jain for the year ended 31st March, 2006:
a) Salary - Rs. 4,222,094
b) Perquisites - Rs. 718,646
The remuneration payable to Mr. Vipul Jain may be revised from time to time, during the currency of appointment of Mr.
Jain, subject to such consents, sanctions as may be necessary for such revision in remuneration.
Stock Options
Mr. Vipul Jain, being promoter of the Company, has not been granted any stock options.
Service Contract, Notice Period and Severance Fees

Mr. Vipul Jain has been reappointed as Managing Director for a period of five years with effect from 1st June, 2003. Mr. Vipul
Jain may resign by giving three months’ notice in writing to the Company without any severance fees.
Remuneration to Non-Executive Directors

Commission - Rs. 300,000
Sitting Fees - Rs. 165,000
Commission to non – executive directors (other than Chairman) is payable @ 0.5% of the profits as computed as per the
requirements of the Companies Act, 1956, subject to a ceiling of Rs. 100,000 per director. A sum of Rs.5,000 is paid to each
independent director for attending a meeting of the Board of Directors or Committee thereof (apart from Share Transfer
Committee Meeting).
Stock Options to Non – Executive Directors
The following non–executive directors have been granted options:
Name of Director No. of Options Granted Date of Grant

th
Mr. K. K. Nohria 15,000 7 February, 2003
th
5,000 27 July, 2004
th
Mr. P. S. Deodhar 10,000 7 February, 2003
th
5,000 27 July, 2004
th
Mr. Pravin Gandhi 15,000 27 July, 2004
Vesting : 30% of the options granted vest on completion of one year from the date of grant. The balance 70% of the options
th
granted vest equally over a period of 8 quarters on a quarterly basis starting from the end of 15 month from the date of
grant of options.
Exercise Period : The options shall be exercised within a period of 2 years from the date of vesting.
Exercise Price : Exercise Price of the options granted is the closing market price on the National Stock Exchange of India
Limited on the date of grant.

No. of equity shares held by Non-Executive Directors
Name of Director No. of Shares Held

Mr. Narendra Kale 1,015,000
Mr. K.K. Nohria 40,000
Mr. P.S. Deodhar Nil
Mr. Pravin Gandhi 5,812
d) Share Transfer Committee
Name of Member Category

Mr. Vipul Jain (*) Promoter
Mr. K.K. Nohria Independent Director
Mr. Sumeet Nadkar Chief Financial Officer
Mr. Ninad Umranikar Company Secretary
Mr. Gurudas Shenoy Associate Vice President - Finance

43 meetings of the Committee were held during the financial year 2005 - 06.
Terms of Reference
Committee approves the share transfers, transposition, etc. based on the reports obtained from the Registrar and Share
Transfer Agent.
Quorum
Quorum for Board as well as Committee Meetings is one third or two directors / members of committees, as the case may
be, whichever is higher.
Disclosures
There are no materially significant related party transactions i.e. transaction, material in nature, with its promoters, directors, their
relatives or the management, subsidiaries of the Company etc. having potential conflict with the interests of the Company at
large.
No penalties or strictures have been imposed on the Company by Stock Exchanges or SEBI or any statutory authority, on any
matter related to capital markets, during the last three years.
Means of communication
Half yearly report sent to each household of Shareholder: No
Quarterly results:
Which newspapers normally published in: Financial Express and Loksatta
Any website where displayed: www.kaleconsultants.com
Whether it also displays official news releases and presentations Yes
made to institutional investors or to analysts:
Whether MD&A is a part of annual report or not: Yes
Shareholder Information
The additional information to shareholders, which forms part of the Corporate Governance Report is annexed hereto.
General Body Meetings

Particulars of Annual General Meetings held during last three years:

Year 2003 Extra Ordinary General Meeting dated 6th February, 2003 – at Mahratta Chamber of Commerce,
Industries and Agriculture, Pune – 411 002 at 12.30 p.m.
Special Resolutions Passed
Creation, offer, issue and allotment of equity shares and / or equity linked instruments (including options), and / or any
other instruments or securities to employees and directors (other than promoter directors) of the Company.
other instruments or securities to employees and directors (other than promoter directors) of subsidiary companies.
Year 2003 AGM dated 23rd July, 2003 – at Mahratta Chamber of Commerce, Industries and Agriculture, Pune –
411 002 at 12.30 p.m.
Reappointment of Mr. Vipul Jain as the Managing Director for a period of five years with effect from 1st June, 2003 and
approval of remuneration payable to him.
Year 2003 Extra Ordinary General Meeting dated 12th December,2003 – at Mahratta Chamber of Commerce,
other instruments or securities to promoters of the Company on preferential basis.
An ordinary resolution under Section 293(1)(a) of the Companies Act, 1956 for the sale of the Banking division was passed
by postal ballot. The results of the postal ballot were declared at the Extra Ordinary General Meeting of the Company held
on 12th December, 2003.
Year 2004 Annual General Meeting dated 28th September,2004 – at Mahratta Chamber of Commerce, Industries
and Agriculture, Pune – 411 002 at 3.00 p.m.
No special resolution was passed at the AGM.
Year 2005 Extra Ordinary General Meeting dated 12th March,2005 – at Mahratta Chamber of Commerce,
Resolution for consideration and approval, with or without modifications, of the Amalgamation between Kale eTravel
Technologies Limited and Kale Consultants Limited.
Year 2005 Annual General Meeting dated 5th September, 2005 – at Mahratta Chamber of Commerce, Industries
and Agriculture, Pune – 411 002 at 12.30 p.m.
Amendment to the Kale Consultants Limited Employee Stock Option Scheme
Grant of Options exceeding 1% of the paid up equity share capital of the Company to Mr. Ashish Malhotra, CEO & Director
of Kale Softech Inc.
Increase in remuneration of Mr. Vipul Jain, Managing Director
DECLARATION
Pursuant to Clause 49 (I) (D) (ii) of the Listing Agreement entered into with the stock exchanges, I hereby declare that
all Board members and senior management personnel have affirmed compliance with the code of conduct.
Vipul Jain
Managing Director

Certificate of Corporate Governance
To,
The Shareholders of
Kale Consultants Limited
I have examined the compliance of conditions of corporate governance by Kale Consultants Limited, for the period ended 31st
March, 2006 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. My examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of corporate
governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In my opinion and to the best of my information and according to the explanations given to me, I certify that the Company has
complied in all respects with the conditions of corporate governance as stipulated in the above mentioned Listing Agreement.
I state that as certified by the Registrar and Share Transfer Agent of the Company and as taken on record by the Investors’
Grievance Committee, there were no investor grievances unattended/ pending against the Company, as on 31st March, 2006, for
a period exceeding one month.
I further state that such compliance is neither an assurance as to future viability nor the efficiency or effectiveness with which the
management has conducted the affairs of the Company.
For M/s. D.G. Kurundwadkar

Chartered Accountant
Place : Mumbai D. G. Kurundwadkar

Date : 25th April, 2006 Proprietor
Membership No. 35602

Management Discussion & Analysis
Safe Harbour Statement

Certain statements in this Annual Report concerning Kale’s future growth prospects are forward-looking statements, which involve a
number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements.
The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in
earnings, Kale’s ability to manage growth, intense competition in IT services including those factors which may affect cost advantage,
wage increases in India, ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame
contracts, client concentration, restrictions on immigration, ability to manage international operations, reduced demand for technology
in key focus areas, disruptions in telecommunication networks, ability to successfully complete and integrate potential acquisitions,
liability for damages on service contracts, the success of the subsidiaries of Kale, withdrawal of governmental fiscal incentives, political
instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of intellectual property and
general economic conditions affecting industry. Kale may, from time to time, make additional written and oral forward-looking
statements, including reports to shareholders. The Company does not undertake to update any forward-looking statement that may
be made from time to time by or on behalf of the Company.
The following discussion and analysis should be read in conjunction with the Company’s audited Financial Statement and the notes
thereon.
Business Strategy Review Promoted by two technocrat entrepreneurs, Narendra Kale and Vipul Jain in 1986, Kale
Consultants Limited (Kale) which started with a capital of Rs. 1 million, a team of 8 and
single room offices in Mumbai and Pune, is now a listed entity having a market
capitalization of over USD 25 million, with 800 people and global operations. Kale is
today recognised as a leading solutions & services provider that offers compelling value
propositions to it’s customers with innovative software and business process
management solutions. Kale stands out in the competitive market place because of
the innovation and depth of solution offerings.
Kale’s solution suite includes solutions for Passenger and Cargo Revenue Accounting,
Ticket Proration, Air Cargo Management, Cargo Ground Handling, and eTravel
Technologies. These solutions are offered across multiple platforms such as outsourced
software development and pay-as-you-go business process management services which
help provide business fit to customer needs.
Kale’s business strategy of leadership through focus in the travel & transportation
industry has enabled the company to identify niche, scalable markets in which the
company has invested significantly to develop strong capabilities. In the second year
post the restructuring, strategies employed by the management has enabled the
company to gain leadership positions in the focus segments.
Global Operations The company has a customer base of more than 60 leading airlines and travel companies
world-wide. The focus on long-term customer relationships and our commitment in
providing value added services to our customers has started reaping huge benefits for
the company.
Kale operates from its global offices situated in the US and UK and Indian offices located
at Mumbai, Pune and Noida.
Kale’s solution offerings
Passenger solutions Kale developed REVERA™ - The New Generation Passenger Revenue Accounting Solution,
is a comprehensive, scaleable and modern Passenger Revenue Accounting system. It is
designed to deliver high levels of straight through processing and productivity to the
complex function of revenue accounting, thus delivering real business value to the
customer. REVERA™ is considered among the “Best of Breed” solutions in the industry
today.
APEX™, a subset of REVERA™ is a proration software (proration is the method by which
revenues from a journey are shared amongst airlines). IATA, with a view to simplify and
reduce costs of interline billing, selected Kale’s product APEX™, as one of the two
suppliers to provide a neutral fare proration (NFP) service to airlines. Most of the world’s
top airlines are expected to use NFP for the bulk of there interline billing transactions in
the next few years.

Kale’s solutions portfolio also includes Decision Support Systems that enable the top
management of the airline to take informed and proactive decisions. This includes
iDEALS™, an airline deal management system for fast and effective distribution of
market fares, and PRISM, a sophisticated business intelligence solution.
Cargo solutions The inclusion of cargo software products like AMBER™ (a sophisticated Cargo
Revenue Accounting System), MERCURY™ (fully integrated software for cargo
ground handling), and CSP™ (a modular, enterprise-wide system for cargo airlines),
means that Kale now has a complete suite of products for the air cargo industry.
Travel The solutions offered by Kale keep in mind business as well as operational needs of the
travel companies. Kale’s eFareEngine is a Fare Database Management and Distribution
system that uploads the complex net fare contracts along with their conditions and
restrictions into a fares database that can be accessed on the web. eFlightInfo is a real-
time flight alert system offering real-time flight information to the traveller via SMS &
web alerts. eFlightInfo is a product designed for airlines, travel management companies
(TMCs) and other service providers to give their customers value added service.
Managed Process Services Kale’s BPO initiative – Kale MPS™ uses Kale’s proprietary product, processes and domain
knowledge. Leveraging Kale’s revenue accounting expertise, industry best practices and
best-of-breed products, Kale MPS™ offers cost efficient revenue accounting recovery
and protection services to enable
• Outsourcing an expensive and non-core function without compromising on security
confidentiality and integrity of the information
• Improving service levels & quality of processes
• Transform cost models form fixed cost approach to “pay for value received’ method
Kale’s Managed Process Services create differentiation and competitive advantage, while
simultaneously reducing unit transaction costs. Kale’s outsourced business processes
enable the customers to free internal resources to focus on core functions, and achieve
lower and more manageable costs. What we offer is not mere arbitrage from Business
Process Outsourcing (BPO), but process driven, quality assured, Service Level Agreements
(SLAs) based managed services.
Kale’s initiative in the BPO space is a strategic extension of its domain expertise in the
travel and transportation industry. Within the outsourcing space, Kale occupies the
highest niche in the value chain as it has complete system ownership. It has created an
outsourcing model, which is stable and scalable.
Thus, Kale’s solutions span from software solutions to outsourced software development
to pay-as-you-go business process management services. This depth of capability
enables Kale to deliver innovative business value propositions that meet the context
specific needs of the customers.
Kale has been able to leverage a well-proven offshore delivery model, quality processes
and strong technical skills to provide complete, compact and cost-effective solutions.
With a solution suite based on domain knowledge, Intellectual Property Rights and
high-end value creating services, Kale has acquired a competitive edge in the global
market.
Industry Developments
(Industry Highlights) Kale’s Neutral Fare Proration (NFP) service during the last year has been quite steady
and has helped Kale strengthen its position in the industry. It has had a direct and positive
impact on the business - the number of airlines signing for this service resulting in
increase in revenue for the company.
The increasing competitive pressures and declining yields has resulted in various industry
initiatives focused on improving the state of the air cargo industry. 2005 saw a number of
new cost saving initiatives taking concrete shape (RFID), old ones being revived (Cargo
2000) and reincarnation of old ones like e-freight (erstwhile CPTP). These industry projects
will lend the industry the much needed direction and steer it towards profitability.

Over the years Kale has provided its full support to all major industry initiatives and this
year too it has announced its full endorsement and support to IATA’s e-Freight initiative.
Kale is also proud to announce its selection as an Industry Associate of Cargo 2000, an
IATA Interest Group. Kale has long been a supporter of the principals of Cargo 2000 –
particularly the desire to improve quality and processes, and the need to drive down
the cost of operations. Our new association with Cargo 2000 will enable us to build
upon this in a way consistent with industry best practices. As a result, our cargo products
will now be aligned with the strict requirements of Cargo 2000. This will enhance our
value proposition and will enable us to provide airlines with solutions that meet the
highest standards demanded by the industry.
Simplify the Business (StB)” is worldwide strategic initiative driven by IATA. To support
this initiative and to facilitate airlines in meeting StB goals, IATA has chosen a select few
organizations as StB preferred partners. Kale is the only Indian company to be selected
for this coveted partnership. This will position Kale as a key facilitator for the airlines, in
their efforts to implement the StB projects initiated by IATA.
Kale Softech Inc., a subsidiary of the company, is now a member of the IATA Clearing
House (ICH); a positive move for smoother and faster invoice settlement for all customers.
This will enable the company to improve its collection cycle
Company’s Performance
Passenger Solutions REVERA™, Kale’s Revenue Accounting solution, has once again proved itself to be one
of the world’s most powerful Passenger Revenue Accounting solutions British Midland
Airways, UK’s second largest carrier has signed a contract with Kale for the
implementation of Revenue Accounting Solutions. Kale has initiated preparatory work
for the execution of the order and expects a positive impact of this order on the revenue
and profitability this fiscal. REVERA™ has also been successfully implemented at Bangkok
Airways this year.
Additionally, this year, Air Mauritius signed a five-year contract with Kale and went live
with iDEALS™, the Online Deal Management System developed by Kale.
Cebu Pacific, the “on time, great value” airline from Philippines also signed a five-year
contract for REVERA™. The airline has gone live in production from January 2006.
Neutral Fare Proration APEX™ is the industry standard proration solution for Neutral Fare Proration (NFP)
selected by AIA (ARC, IATA and ATPCO) as one of the two co-existing solution offerings
to the industry, other being CIPS from ATPCO. APEX™ has been commissioned for usage
by 2 of the top-10 airlines, Northwest Airlines (4th largest in the world) and Continental
Airlines (6th largest in the world), since March 2005. Three other airlines have selected
Kale for NFP and are in the process of implementation.
Cargo Solutions Indian Airlines, one of the largest regional airlines in Asia signed a five year contract
with the company for CSP™- the Enterprise-Wide Cargo Solution. This contract is for
the complete suite of CSP™ solutions, provided on a hosted basis across 63 domestic
and international stations of the airline. To offer a complete solution, Kale will also provide
and maintain hardware at 10 Indian Airlines stations.
This is an important milestone for Kale as it marks the launch of CSP™ Rel 2.0 on a
hosted basis.
Asiana Airlines, one of the top 20 cargo airlines globally, and a CSP™ user since December
2003, has reinstated its faith in the solution by renewing its contract with Kale.
Managed Process Services Revenues from the long term, multi-year contracts from Managed Process Services (Kale
MPS™) grew by 22% to Rs. 274.11 million over the previous year. Icelandair signed a
three-year contract for Revenue Recovery & Protection Services (RRPS) which will be
provided through Kale MPS™.
The company has introduced a new service- Cargo Revenue Recovery and Protection
Service and successfully commissioned it for one of the largest Asian Carriers. This opens
up another avenue for Kale to deliver bottom line value to the airline community.

Kale MPS™ continues to forge ahead with 4 new customers being added in this year.
Alongside Revenue Accounting Service, Revenue Recovery Protection Services offered
by Kale MPS™ has also received a tremendous response from the market. For the new
customers added, Kale MPS™ will carry out secondary interline audit, cargo audit,
passenger sales audit and RBD audit services. These services will help airlines to prevent
the loss of revenue significantly improving their profit margins.
Travel Solutions The Travel Technologies Solutions group continues to forge ahead. The group undertook
several new projects thereby increasing Kale’s share of wallet of customers. New projects
included projects with TQ3, like Netprofile integration with Sabre GetThere and
Netprofile version 2.0 were also added. The pipeline for travel vertical also looks very
strong and healthy.
The head count and infrastructure is seeing a ramp up following extension of long
term, multi-year contracts from existing customers. Solutions developed for ZUJI, a
prominent online travel player in South East Asia and Australia has gone live. Kale has
renewed the contract with Lastminute.com, one of the leading online travel & leisure
companies.
Order book position The greatest testimony to the sustained value of a company’s service is if its customers sign
for repeat orders. During the year several of the Company’s customers including Qatar Airways,
Gulf Air, British Midland, Continental Airlines, Delta Airlines, Last Minute.com, TQ3, Portugalia
Airlines, renewed / signed long-term multi-million dollar deals. Today the company has an
order book of over Rs. 3,600 million to be completed over the next 4-5 years.
Shareholders’ funds Shareholders’ funds increased from Rs. 540.41 million to Rs. 629.30 million during the
year 2005-2006
Equity During the year, Share Capital and Share premium increased by Rs. 11.63 million and Rs.
32.18 million respectively on account of the preferential allotment to promoters and
exercise of share options by employees.
Presently, Kale has 12,844,990 shares (P.Y 11,682,450) of Rs. 10 each fully paid up.
Increase in Equity Shares (No’s) Amount Rs. (Million)
during the year
Promoters (Preferential allotment) 700,000 27.27
Employees (ESOP) 462,540 16.54
Total Increase 1,162,540 43.81
Profit and Loss Account Kale’s retained earnings as at 31st March, 2006 amount to Rs. 129.58 million. The Board
has recommended a dividend of Rs. 1.25 per share for the financial year 2005-2006 at
the Board Meeting held on 25 th April, 2006. Accordingly, a provision for dividend
(including dividend tax) to the tune of Rs.18.31 million has been made and an amount
of Rs. 1.62 million has been transferred to General Reserve.
As at 31st March, 2006, Kale’s book value per share increased to Rs 48.99 per share as
compared to Rs 46.26 per share as at 31st March, 2005.
Loan Funds During the year Kale raised a new term loan for Rs. 29.94 million and repaid Rs. 41.08
million thereby reducing the total term loans outstanding on this account by Rs. 11.14
million to Rs. 72.27 million.
Working capital loans outstanding as at 31st March, 2006 decreased by 51.50% from Rs.
78.57 million to Rs. 38.10 million.
This decrease in long term loans has improved the gearing ratio to 19.20% from 30.81%
in the year 2004-2005.
Investments Kale’s Investments at cost amount to Rs. 95.81 million as compared to Rs. 154.57 million
as at 31st March, 2005. This reduction is on account of amalgamation with Kale eTravel
Technologies Limited wherein Kale’s investment was Rs. 49.91 million.

During the year Kale sold its entire holding of 275,000 shares in Onward Technologies
Limited for Rs.16.86 million. These shares had been acquired by Kale in part consideration
of the sale of it’s Banking Products Division to Onward Technologies Limited.
Fixed Assets
Product Development During the year product development cost amounting to Rs. 72.04 million has been
capitalised as intangible assets.
Other Fixed Assets and Goodwill Kale added Rs. 44.07 million to the gross block comprising of Rs 23.39 million in plant
and machinery, Rs. 9.65 million in purchase of new vehicles and the balance Rs. 11.03
million in other assets.
The amalgamation of Kale eTravel Technologies Limited with Kale Consultants Limited
has resulted in Goodwill amounting to Rs. 47.08 million and this has been capitalised in
the books. Assets costing Rs. 5.67 million comprising majorly of plant and machinery
(Rs. 1.77 million) and intangibles (Rs. 2.34 million) were acquired on amalgamation and
are included in the Fixed Assets.
Sale / Disposal of Assets During the year Kale sold / disposed off assets with a gross book value of Rs. 9.51 million
and a depreciated net value of Rs. 1.99 million. Kale also sold its unutilised properties
standing at a net book value of Rs. 5.72 million located at Pune and Kolhapur.
Kale’s Gross Block as at 31st March, 2006 stood at Rs. 807.79 million as compared to Rs.
655.88 million as at 31stMarch, 2005. The corresponding Net Block as at 31st March,
2006 is Rs. 419.97 million as compared to Rs. 359.75 million as at 31st March, 2005.
Net Current Assets
Sundry Debtors Kale’s Net Receivables as at 31st March, 2006 amounted to Rs. 193.78 million as compared
to Rs.255.24 million as at 31st March, 2005. These debtors are considered good and
realisable.
The need for provisions is assessed based on various factors including collectibility of specific
dues, risk perceptions of the industry in which the customer operates and general economic
factors which could affect the customer’s ability to settle and finally depending on the
management’s perception of the risk. The total provision for doubtful debts as at 31st March
2006 stands at Rs. 17.52 million compared to Rs. 14.64 million as at 31st March, 2005.
Debtors as a percentage of revenue is 30.96% as at 31st March 2006 as against 51.78%
as at 31st March, 2005.
Current Liabilities As at 31st March, 2006 Kale’s current liabilities amount to Rs. 100.97 million as compared
to Rs. 148.81 million as at 31st March, 2005 This reduction of 32.15% is attributed to an
improved working capital management and better liquidity which enabled payment to
subsidiaries and faster settlement of dues to the creditors. Creditors and Subsidiary dues
outstanding as at 31st March, 2006 are Rs. 13.66 million and Rs. 25.95 million respectively
as compared to Rs. 25.30 million and Rs. 68.76 million as at 31st March, 2005.
Kale received Rs. 8.64 million from clients as advances against new contracts during the year.
Provisions for the year have increased by Rs. 23.07 million. These include Provision for
Dividend (inclusive of Dividend Tax) amounting to Rs.18.31 million and a Provison for
Tax amounting to Rs. 4.76 million.
Result of Operations
Income For the year ended 31st March, 2006, Kale recorded operating income of Rs. 625.84 million
as compared to Rs. 492.92 million for the year ended 31st March, 2005.
Kale’s Domestic Sales increased by 71.56% and Export sales increased by 19.73%. Domestic
sales led by growth in revenue from Air India, now contribute 18.86% of the total sales as
compared to 13.96 % in year 2004-2005. During the year Kale added 6 new customers and

2005-06 2004-05
Export
81%
Export
86%
Dom estic
14%
Dom estic
19%
Composition of Sales
further acquired 8 customers on amalgamation with its subsidiary. This, coupled with new
contracts from existing customers contributed to an increased revenue during the year.
For the year ended 31st March, 2006, Kale booked Other Income amounting to Rs. 17.03
million. This consisted primarily of profit on sale of investments (shares of Onward
Technologies Ltd) amounting to Rs. 7.79 million and rent received for letting out
unutilised properties of Rs. 3.36 million. During the year Kale received interest of Rs.
2.64 million comprising mainly of bank interest (Rs. 1.48 million).
Kale’s total income from operations has grown by 27.05% from Rs. 505.99 million in the
year 2004-2005 to Rs. 642.87 million in the year 2005-2006.
625.84 642.87
700 700
Rs. In Million
Rs. In Million
600 492.92 600 505.99
500 500
400 400
2004-05 2005-06 2004-05 2005-06
Operating Income Total Income
Operating Expenses Software development expenses at Kale grew by 28.41% as compared to the year 2004-
2005, in line with the increase in revenue.
Increase in costs include: Salary cost: Rs. 66.78 million; Consultancy charges: Rs. 3.98 million;
Data Entry Charges: Rs.1.47 million; Communication: Rs.1.01 million; Software Annual
Maintenance Contracts: Rs. 1.22 million and Cost of Consumables and Spare Parts: Rs. 1.11
million.
General Administration, selling and other expenses increased by 7.71% to Rs. 238.42 million
for the year 2005-2006 as compared to Rs. 221.36 million in the year 2004-2005.
Major increases in expenses comprise of: Power and fuel charges Rs. 3.07 million and
communication costs: Rs. 1.27 million. Rent increased by Rs. 4.71 million on account of
additional facility (at Noida) acquired on amalgamation Subscription and membership
charges increased by Rs. 5.95 million for subscription for information on industry data. Kale
booked an exchange loss of Rs. 4.21 million this year which is primarily a translation difference
on restatement of Assets and Liabilities Rs. 4.31 million was written off as net bad debts
during the year.
462.99
500 400 296.61
350
450
Rs. In Million
Rs. In Million
386.14 300 230.97

400 250
200
350
150
300 100
2004-05 2005-06 2004-05 2005-06
Total Operating Expenses Software Development, Delivery

and Support Expences

Depreciation, Amortisation
and Interest charges During the year, an amount of Rs. 9.42 million has been amortised on account of Goodwill
that has arisen on account of amalgamation of Kale eTravel Technologies Limited with
Kale Consultants Limited. Depreciation cost during the year increased by Rs. 5.06 million
on account of additions made during the year.
Amortisation costs increased by 24.53% which is on account of capitalisation of product
development costs in the previous year being amortised in the current year.
The increase in interest rates and additional term loan raised during the year led to an
increase in interest cost by Rs. 1.57 million. Interest coverage ratio has gone up from 14
in the previous year to 18 in the current year on account of higher profits.
11.0 9.94
125
100.32
Rs. In Million
10.0
Rs. In Million
100
74.76 8.37
9.0
75
8.0
50 7.0
2004 -05 2005 -06 2004-05 2005-06
Depreciation and Amortisation Interest Charges

Operating Profit Kale reported a PBIDT of Rs. 179.88 million in the year 2005-2006 as against Rs. 119.86
million in the year 2004-2005. Operating profit 69.62
after interest cost and depreciation and
50
amortisation, grew by 89.58% to Rs. 69.62 million 36.72
40
in the year 2005-2006 from Rs. 36.72 million in
Rs. In Million
30
year 2004-2005. The improved margins are on
20
account of increase in revenue, wherein, costs
10
corresponding to the incremental revenues grow
0
at a lower rate, resulting in improved profitability. 2004-05 2005-06
* Profit Before Tax and Provision for Diminution Profit Before Tax*
in Value of Investments.
64.84
Profit after Tax Kale recorded a PAT of Rs. 64.84 million for the year
50
as compared to Rs. 7.52 million for the previous
40
Rs. In Million
year. Net profit for the previous year has been

30
calculated after making a provision of Rs. 29.19
20 7.52
million for diminution in value of investments in
10
subsidiaries/joint ventures. Net profit as a
0
percentage of total income is 10.09% as compared 2004-05 2005-06
to 1.49% in the year ended 31st March 2005. Profit After Tax
Dividend Kale declared a dividend of Rs. 1.25 per share amounting to Rs. 18.31 million (including
Dividend Tax Rs. 2.25 million).
IPR Assets and Amortisation As a value innovator, Kale has always believed in developing its own Intellectual Property
(IP) and over the years has invested significant amount of resources in this development.
All these products have been viewed as the best of the breed products by the industry
and highly appreciated by the customers.
Details of IPR assets and amortisation are as follows:
Rs. in Million
Particulars Amount
Opening Net Block as on 01/04/2005 167.18
Additions during the year 74.43 (*)
Amortisation during the year 56.21
Sale during the year -
Closing Net Block as at 31/03/2006 185.40
(*) includes Rs. 2.39 million acquired on amalgamation
Operating Revenue 650 619.95
600
for the last five years 550 CAGR 19.47%
480.54
Rs. in Million
Travel and Transportation Revenue Revenue has grown at fairly flat rates over the 500
450
years. Subsequent to the restructuring 400
376.16
347.89
exercise undertaken by Kale in year 2003- 350 304.27
2004, the company has now attained stability 300
in the Travel and Transportation vertical. Over 250
2001 -02 2002 -03 2003 -04 2004 -05 2005 -06
the past five years this vertical has seen a
CAGR of 19.47%. Revenue has more than Travel and Transportation Revenue
doubled in the last 5 years from Rs. 304.27 million in the year 2001-2002 and to Rs. 619.95
million in the year 2005-06.
Annuity Type Revenue Furthermore, a shift in the
500 451.76
Kale’s business model from
450 394.52
Initial Licensing Fee (ILF) to CAGR 37.25%
Annuity type stream has 400
Rs. in Million
ensured committed and 350
262.73
300
secured revenue from long 214.42
250
term contracts with greater 127.29
200
stickiness. The Annuity type
150
revenues have grown from
100
Rs.127.29 million in the 2001-02 2002-03 2003-04 2004-05 2005-06
year 2001-2002 to Annuity Type Revenue
Rs.451.76 million in the
year 2005-2006 growing at a CAGR of 37.25%.
Future Outlook The industry is returning to a more normal growth pattern after the shocks that began
in 2001. As per figures released by IATA, international passenger traffic grew by 7.6%
in 2005 while international freight traffic increased by 3.2%.
Oil remains the single biggest challenge for airline profitability. Strong demand gives
little hope of reduced prices this year. As such, cost reduction remains critical. All industry
partners and stakeholders will have to sustain their focus on fuel efficiency and attack
costs.
There is a new optimism emerging in the industry. Improved economic prospects in
Europe and Asia combined with an improving situation in the US will lead to reduced
losses in 2006 and strengthened profitability in 2007. The theme for the airline industry
as very well articulated by IATA is to “Simplify the Business” and thereby reduce costs
and gain operational flexibility.
Kale’s solutions help customers achieve precisely these goals – the revenue accounting
portfolio helps airlines to reduce back office processing costs and prevent revenue losses.
They provide customers with better and actionable business intelligence and thereby
respond to the market dynamics with speed and precision. The cargo solution suite
delivers end-to-end process management capability to enable the business to increase
cargo yields, enhance customer service and reduce transaction processing costs and
delays.
Research data indicates that there are about 19 business processes, which airlines could
outsource to a third party vendor to offshore locations like India. Kale’s Managed Process
Services enables customers to outsource their business process and focus on their
strategic business drivers. Going forward, Kale will expand its offerings through Kale
MPS™.
The growth of internet travel sales has been phenomenal – in 2005 an estimated US
$113 billion worth of travel products were bought on-line. In the US an estimated 65%
of airline domestic sales are done on-line. In Europe, the number is currently 30% but
there is no doubt that the numbers will grow. Asia and India are not far behind. The
Travel industry is undergoing fundamental changes. In the next five to ten years, there
will be a churn in the players and a radical transformation of the industry structure and
roles. There is a huge opportunity as never before as the opening up of the civil aviation

sector and the growth of the economy create ripple effects. Kale expects to leverage on
this opportunity.
Thus each of Kale’s solutions deliver sustained value propositions to customers and are
gaining increased acceptance in the Industry. The current year’s results indicate that the
benefits of Kale’s business model are beginning to kick-in and as Kale’s revenues scale,
it’s profitability will improve significantly. The management believes that a combination
of its business model, potential market size, industry trends and imperatives and the
company’s own performance augurs well for sustained growth and improved profitability.
Opportunities and Strengths Your company has identified several opportunity areas with a view to enhancing market
presence. Significant areas are:
• Expanding our market reach by focusing on complete solutions offering to include all
of travel & transportation industry – which will include airlines, rails, roads, shipping etc.
• Enhancing the service portfolio through investment and marketing of newly
introduced services
• Continued sales focus on areas of distinct competitive strength
• Strengthen new customer base
• Aggressive growth in key customer relationships
Threats & Risks Kale operates in a global environment and is therefore susceptible to the risks that this
entails.
Some of these risks include:
Revenues are difficult to predict because they can fluctuate drastically given the product
license model and nature of the markets in which Kale operates. This increases the
possibility that short-term results could fall below the anticipation of market analysts.
Mitigants – Over the last few years Kale has been consistently addressing this concern and
increasing focus on annuity type revenues from per transaction Right To Use fees and MPS.
During the year ended 31st March, 2006 over 70% of the revenues of the company are such
annuity type predictable revenues.
Severe competition in the market for IT Services could lead to billing pressures as well
as reduction in revenue.
Mitigants – Post restructuring, Kale’s main focus are the travel and transportation industries,
where its domain skills, experience and solutions give it an edge over competition. Kale plans
to leverage these strengths even more to strengthen its competitive positioning.
Wage costs in India have considerably been lower than wage costs in the United States
and Europe for comparably skilled professionals, which has been one of the competitive
advantages. However, wage increases in India may prevent us from sustaining this
competitive advantage and may negatively affect profit margins. Kale may need to increase
the levels of employee compensation more rapidly than in the past to remain competitive.
Mitigants – Since Kale has effectively exited from the generic software services market and
today essentially focuses on travel and transportation industry its competitive advantage
is not just based on lower wage costs in India. However to guard against this risk and also
use capital effectively, the Company will continue to work towards increasing the efficiency
and productivity of employees.
Being an IT company, Kale’s ability to execute project engagements and to obtain new
clients depends largely on part of its ability to attract, train, motivate and retain highly
skilled professionals, especially project managers, software engineers and other senior
technical personnel.
Mitigants — Kale offers an open and fair work culture that enables people from diverse
cultural, educational and professional backgrounds to work together as a powerful team.
Kale’s HR initiatives create an excellent breed of professionals with the right values and skills.
Kale will continue to consciously work towards developing multi-skilled, self-managed and
motivated employees.
Kale focuses on service industries such as travel and transportation. Any decrease in
demand for technology in such industries may significantly decrease the demand for
services, which may impair growth and cause revenues to decline.
Mitigants – The air transportation and travel industries are growing at a healthy rate. Despite
this growth the pressure in these industries to reduce costs has been unrelenting. The industry

is thus faced with a pretty complex challenge –growth on one hand and continue making
operations more cost effective on the other. Kale’s unique mix of products and services is ideally
positioned to meet this need at least in the foreseeable future. Besides this the increased thrust
on recurring annuity type revenues with long term contracts will also reduce risks.
Adequacy of
Internal Control Systems The company’s internal control systems are well designed to provide reasonable
assurance that assets are safeguarded, transactions are properly recorded in accordance
with management’s authorization, and accounting records are adequate for preparation
of financial statements and other financial information. Internal audits are performed
regularly to ascertain their adequacy and effectiveness. The internal audit function also
carries out Operations Review Audits. The audit committee periodically reviews the
functions of internal audit.
Human Capital Kale recognizes the value of the resources and talent in the company and invests
continuously in both, career & personnel development. Our maior focus during the
fiscal has been to acquire, train and nuture talent. Today there are more than 800 Kaleites
spread across various nationalities and geographical locations. Every Kaleite enjoys a
work place that poses new challenges, new avenues to learn and an unparalled
environment. Human Resources has undertaken a few new initiatives this year in the
area of Performance Management, Measurement, Rewards and Recognition, thereby
giving a new impetus to our growing organization.
All new employees go through an induction process to imbibe the company’s culture
and philosophy, through structured induction programmes. Employees undergo
product and process training before being assigned to specific job roles. The focus is
on ensuing that each and every employee is certified to have product and process
knowledge before they enter into the job responsibility.
The culture and the values of Kale instill the spirit of openness across all levels. As a
result, people at Kale work in an exciting and enjoyable team-based environment.
The company provides a high performance culture, which creates a sense of competitive
spirit among employees. Thereby helping them to better and more every time. We have a
performance based reward system, which recognizes employees and rewards them both
monetarily and non-monetarily. Kale encourages an Equal Employment Opportunity Policy
(EEO Policy) in which it discourages discrimination against any employee or applicant for
employment because of his/her sex in regard to hiring, termination, promotion,
compensation, job training, or any other term, condition, or privilege of employment.
At Middle Management level Kale has around 21% women and at Senior Management
this statistic is around 10%. Kale has a relatively young work force; the average age of
Kale employees is just 28 years. Over 24% of Kale employees have postgraduate
qualifications, 73% graduates and about 3% diploma holders and others.

Kale’s Social Initiative
Catalysts for Social Action (CSA)

Catalysts for Social Action, Kale’s Corporate Social Responsibility has been working on Child Welfare with specific focus on Child
Adoption, since its inception in September 2003. The choice to work on Child Adoption came from the belief that Adoption is the
most complete and qualitative form of rehabilitation of the destitute child. CSA’s research in the field highlighted several
shortcomings in the existing system and, an abysmal statistic of less than 5000 adoptions in a country with a population of a
billion people.
CSA’s objectives are:
• To enhance the number of adoptions in the country.
• To work towards better child care both, while the child is institutionalized and post-adoption through guidance and
facilitation.
CSA works with all Central Adoption Resource Agency (CARA) - registered Adoption agencies across the country.
The initial years were spent primarily on community building and on getting all stake holders on a common platform. CSA
worked
• with Adoption stakeholders through the website www.csa.org.in ( an information repository on Adoption),
• with adoption agencies through donations- computers, software and other donations, training programmes for agency-
staff, children’s events, etc.
• with Adoptive Parents’ Associations and Voluntary Co-ordinating Agencies (VCAs), in conducting promotional campaigns
and workshops
• with the Police and Government departments in conducting sensitization programmes.
• through the print and electronic media to promote awareness
• with Aparents and Adult Adoptees and two Chat Groups for Aparents and Adult adoptees respectively
• through Research studies, (CSA brought out 3 White Papers) which set directions for the work that had to be done.
Significant work done in 2005-06.
The Latur Pilot
A significant finding that one of the research studies revealed, was a huge mismatch between children waiting to find homes and
waiting Aparents; while most city agencies had several waiting parents, those just outside the metros, had several languishing
children waiting to find homes. The year 2005-06 accordingly, focused on directly addressing the issue of speedy placement of
children primarily by bringing the waiting parents and waiting children together.
CSA attempted first to work in Bihar and Orissa, both being states where the situation was rather dismal, and where the need for
some initiative was acute. Unfortunately lack of response from the concerned Government Departments delayed the process;
CSA had eventually, to shift base to Maharashtra where the State Government, (though in a much better position in terms of
Child Rehabilitation) was yet, receptive to initiatives . CSA started the Latur Pilot (so called because the model can be replicated
in any other location in the country) in May, 2005. The pilot adopted a 2-pronged approach ‘up-gradation’ and ‘promotion’.
Up gradation
• 7 agencies in the districts of Latur, Udgir and Nanded, formed the pilot group. Across these agencies there are 121
children waiting to find homes.
• CSA worked extensively to upgrade the agency that had the maximum number of children. CSA worked with the other 6
agencies too but to a lesser degree. Upgadation involved:
Provision of equipment (baby warmer), solar heater, cupboards, clothes, linen, toys, provisions, medicines, etc.
renovation of the premises , improving health standards, painting, mosquito netting, provision of a sick room, moving
kitchen, etc.
Providing a play pen, books and music system for the children.
Providing uniforms to childcare workers.
Extending the services of a full-time Teacher-cum-Supervisor to oversee childcare.
Facilitating case-by-case paper work to ensure the legal clearance of a child for adoption.
• CSA conducted training programmes for Agency workers and Aparents.

• CSA organized fun and games events for children from the participating agencies. The children were exposed to such an
event for the first time in their lives.
Promotion
• CSA conducted sensitisation programmes for representatives from the Government Departments, Police, Judiciary and
the Media.
• CSA focused on extensive Print and Media coverage and are working on the issuance of a full-page supplement in a leading daily.
• CSA involved the local community in executing the programmes.

Kale’s Social Initiative
Achievements
• CSA have identified approx. 15 children across the 7 agencies who can be immediately transferred (as per the CARA
Guidelines) into agencies that have waiting parents. The State Government has issued transfer orders for 6 children; 2 of
them have already moved.
• The State Government has also issued instructions to all registered agencies under their jurisdiction to transfer all eligible
children .
• The entire Latur effort was facilitated by Adoption stakeholders and by Kale employees.
Jawaharlal Nehru Udyog Kendra, (JNUK) Pune
The JNUK, Pune is a state run home for children in conflict with the Law. With a capacity of 300 children, the institution currently,
has 174 children in the age-group of 8-18 years. During their stay here, the children are provided with both schooling and with
vocational training. Spread over a huge complex, there are vocation centers for computers, carpentry, tailoring, fine arts, electrician,
welding, printing, etc.
CSA has undertaken the responsibility for upgradation of the facilities at the institute and better childcare while the child is
institutionalized. Another significant feature is that the entire effort is being routed through Corporates.
Achievements
Nerolac Paints Ltd. have donated paint.
Solaris Health Club is setting up a full fledged Gymnasium which will be operated by them; their trainers will train the children.
The computer centre is being set up by Kale Consultants Ltd. Kale will likewise operate the center and will send their trainers to
conduct both classroom and hands-on training.
CSA is working with other corporates to procure equipment and support services for all the other departments. The landscaping
of the entire premises will also, be undertaken and the children will be encouraged to take on the gardening. Jagtap Nurseries,
Pune have agreed to participate.
Provision for fun and games, competitions, etc have also been made.
The objectives of the assignment are:
• To work towards keeping the children healthy in mind and body.
• To equip them with skills that they may take up after leaving the institute, instead of graduating into the world of crime.
Facilitating their employment through participating corporates, wherever possible
• Setting up a state-of-the – art facility which may become a permanent training centre not only for the children in the
institute but also, for children from other similar institutes as well.
• Replicating the model in other states and bringing in the corporate community.
Other work/ Achievements
Training programmes and workshops were held in Mumbai and Pune.
Childrens’ events were held in Mumbai and Pune.
Promotional efforts were initiated through the print and electronic media.
Information content on CSA Website was regularly updated.
Both, CSA Chat Groups Adoption_Experiences@yahoogroups.com and Adoptees_Voices@yahoogroups.com are active forums
for adoption stakeholders to exchange views and share experiences/ information/ knowledge. The Chat Group now has 495
members.
CSA is now an active forum managed almost entirely by Kale Employees. 4 Managing Committee members have been inducted
from VP, SVP in the organization.
Kale volunteers not only give donations but also, take on the responsibility for execution of the initiatives.
BONSAI, Pune have donated 10 boxes of toys and clothes for distribution amongst agency children.
Initiatives 2006-07
• Placement of all 121 children in the 7 identified agencies by the end of the financial year.
• A full- fledged research study on Best Practices in Adoption in India (over 18 months) has been initiated.
• A formal ‘Train-the Trainers” programme covering training modules for Agency staff including Management staff.
• A promotional booklet on Adoption for mass circulation has been initiated. Reputed Stakeholders/ experts have been
invited to write on different aspects of Adoption.

Auditor’s Report
To,
The Members ,
Kale Consultants Limited,
Pune.
1. I have audited the attached Balance Sheet of Kale Consultants Limited, as at 31st March, 2006 and the Profit and Loss
Account for the year ended on that date, annexed thereto and the Cash Flow Statement for the year ended on that date.
These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion
on these financial statements based on my audit.
2. I have conducted my audit in accordance with auditing standards generally accepted in India. Those Standards require that
I 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 the
management as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 including amendments thereto issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, I enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to my comments in the annexure referred above I report that :
a) I have obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for
the purpose of my audit.
b) In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my
examination of the books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with
the books of account.
d) In my opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report
comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, to the
extent applicable.
e) On the basis of written representations received from the directors of the Company as at 31st March, 2006 and taken
on record by the Board of Directors, I report that no director is disqualified from being appointed as director of the
Company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
f) In my opinion, and to the best of my information and according to the explanations given to me, the said Balance Sheet
and Profit and Loss Account read together with notes give the information required by the Companies Act, 1956, in the
manner so required and give a true and fair view :-
i) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2006;
ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

D.G. Kurundwadkar
Place : Mumbai Proprietor
Date : 25th April, 2006 Membership No. 35602

Annexure to Auditor’s Report
(Referred to in Paragraph 3 of my Report of even date)
1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of
fixed assets.
(b) The fixed assets have been physically verified by the management at reasonable intervals. As informed to me, no
material discrepancies were noticed on such a verification during the year.
(c) During the year, the Company has sold and written off certain fixed assets.
2. (a) The inventory and consumables and spare parts for computers of the Company have been physically verified by the
management at reasonable intervals.
(b) In my opinion, the procedures of physical verification of inventories followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no discrepancies were noticed on physical verification.
However, there was no inventory and consumables and spare parts for computers as on 31st March, 2006.
3. As informed to me, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies,
firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
4. In my opinion and according to the information and explanations given to me, there is an adequate internal control system
commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets
and for the sale of products and services.
5. (a) Based on the audit procedures applied by me and according to the information and explanations provided by the
management, I am of the opinion that there were no contracts or agreements referred to in section 301 of the Companies
Act,1956 that have to be entered in the register required to be maintained under that section. However, the Company
has rendered/received services, claims for expenses and raised invoices on behalf of its subsidiary.
(b) In my opinion and according to the information and explanations given to me, there were no transactions made in
pursuance of such contracts or arrangements that have to be entered in the register required to be maintained under
Section 301 of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public during the year.
7. In my opinion, the Company has an internal audit system commensurate with the size and nature of its business.
8. As informed to me, the Central Government has not prescribed maintenance of cost records u/s 209 (1) (d) of the Companies
Act, 1956 for the Company and any of its products.
9. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident
fund, investor education & protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty, cess and other material statutory dues, as applicable to the Company.
(b) According to the information and explanations given to me, no undisputed amounts payable in respect of income tax,
wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2006 for a period
of more than six months from the date they became payable.
(c) According to the information and explanations given to me, there are no dues of income tax, customs duty, wealth tax,
service tax, excise duty and cess which have not been deposited on account of any dispute. However, according to the
records of the Company the following are the disputed amounts in respect of sales tax:
The Company has filed appeals with Asst. Commissioner of Sales Tax, (Appeals), Pune with respect to a) demand of Rs.
656,580 pertaining to disallowance of overseas sales and services, b) demand of Rs. 191,487 relating to disallowance of
software services and c) demand of Rs. 137,760 relating to disallowance of set off.

(Referred to in Paragraph 3 of my Report of even date)
10. The Company has no accumulated losses at the end of financial year and it has not incurred any cash losses in the current
and immediately preceding financial year.
11. Based on the audit procedures and on the information and explanations given by the management, the Company has not
defaulted in repayment of dues to any financial institution or bank. The Company does not have any borrowings by way of
debentures.
12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and
other securities.
13. In my opinion and according to the information and explanations given to me, the nature of activities of the Company does
not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.
14. The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions
of clause (xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.
15. According to the information and explanations given to me, the Company has not given any guarantee for loans taken by
others from banks or financial institutions.
16. The Company has utilised the term loan for the purpose for which the loan was obtained, however short-term surpluses
have been temporarily placed in short term deposits with the bank.
17. According to the information and explanations given to me and on an overall examination of the books and records of the
Company, I report that in no cases, funds raised on short-term basis have been used for long-term investment.
18. The Company has not made preferential allotment to parties and companies covered in the register maintained under
19. The Company has not issued any debentures.
20. The Company has not raised any money through a public issue during the year.
21. Based upon the audit procedures performed and information and explanations given by the management, I report that no
fraud on or by the Company has been noticed or reported during the course of my audit.

D.G. Kurundwadkar

Financial Statements
As at As at
Balance Sheet 31st March, 2006 31st March, 2005
Schedule (Amount in Rs.) (Amount in Rs.)
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital .............................................................................................. 1 128,455,950 116,830,550
Reserves and Surplus ............................................................................. 2 500,837,851 420,845,634
Partly Paid Warrants ................................................................................ - 2,730,000
629,293,801 540,406,184
Loan Funds
Secured Loans ........................................................................................... 3 120,854,146 166,493,363
TOTAL .......................................................................................................... 750,147,947 706,899,547
APPLICATION OF FUNDS
Fixed Assets .............................................................................................. 4
Gross Block ................................................................................................. 807,787,254 655,881,682
Less : Depreciation and Goodwill ...................................................... 206,893,282 171,419,399
Less : Amortisation of Product Cost ................................................. 180,923,361 124,713,630
Net Block ..................................................................................................... 419,970,611 359,748,653
Investments .............................................................................................. 5 95,581,650 154,571,125

Current Assets, Loans and Advances
A. Current Assets
Sundry Debtors ......................................................................... 6 193,779,095 255,238,255
Cash and Bank Balances ........................................................ 7 71,058,476 16,782,507
Other Current Assets ............................................................... 8 32,656,182 16,308,866
B. Loans and Advances ....................................................................... 9 61,646,018 53,560,443
359,139,771 341,890,071
Less : Current Liabilities and Provisions .................................... 10
A. Current Liabilities ............................................................................. 100,971,248 148,809,665
B. Provisions ............................................................................................ 23,572,837 500,637
TOTAL .......................................................................................................... 124,544,085 149,310,302
Net Current Assets ................................................................................... 234,595,686 192,579,769

TOTAL .......................................................................................................... 750,147,947 706,899,547
Significant Accounting Policies and Notes to Accounts .......... 16
The Schedules referred to above and the notes thereon form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in my report of even date.
For M/s. D.G. Kurundwadkar For and on behalf of the Board of Directors
D.G. Kurundwadkar Ninad Umranikar Narendra Kale Vipul Jain Prabhakar Deodhar Pravin Gandhi
Proprietor Company Secretary Chairman Managing Director Director Director
Place : Mumbai

For the year ended For the year ended

Profit and Loss Account 31st March, 2006 31st March, 2005
Income
Software Products and Services
Domestic .............................................................................................. 118,044,665 68,805,534
Overseas ............................................................................................... 507,794,271 424,118,416
625,838,936 492,923,950
Other Income ............................................................................................ 11 17,032,356 13,068,340
TOTAL ........................................................................................................... 642,871,292 505,992,290
Expenditure
Software Development, Delivery and Support Expenses ....... 12 296,605,048 230,974,060
Administration, Selling and Other Expenses ................................ 13 238,423,322 221,356,625
TOTAL ........................................................................................................... 535,028,370 452,330,685
Less : Product Development Cost ..................................................... 72,038,280 66,194,703
Total Operating Expenses ................................................................. 462,990,090 386,135,982
Operating profit (PBIDT) ...................................................... 179,881,202 119,856,308
Interest and Finance Charges ............................................................. 9,941,613 8,371,306
Depreciation and Goodwill ................................................................. 44,108,903 29,623,962
Amortisation of Product Cost ............................................................. 56,209,731 45,137,460
Profit Before Tax and Provision for Diminution in
Value of Investments ............................................................ 69,620,955 36,723,580
Provision for Diminution in Value of Investments ...................... 14 – (29,188,405)
Profit Before Tax (PBT) ......................................................................... 69,620,955 7,535,175
Provision for Taxation ............................................................................. 1,778,000 15,000
Provision for Fringe Benefit Tax ......................................................... 3,000,000 –
Profit After Tax (PAT) ............................................................................ 64,842,955 7,520,175
Prior Period Items .................................................................................... 15 1,272,776 (6,262,090)
Profit brought forward from previous year ................................... 83,391,832 82,133,747
Amount available for Appropriations ......................................... 149,507,563 83,391,832
Appropriations
Transferred to/(from) General Reserve ........................................... 1,621,074 –
Proposed Dividend ................................................................................. 16,056,238 –
Dividend Tax .............................................................................................. 2,251,888 –
Balance carried forward to Balance Sheet ..................................... 129,578,363 83,391,832
TOTAL ........................................................................................................... 149,507,563 83,391,832
Earnings per Share (Equity shares, face value Rs.10 each)
Basic ............................................................................................................... 5.33 0.11
Diluted .......................................................................................................... 5.17 0.10
Number of shares used in computing earnings per share
Basic ............................................................................................................... 12,402,156 11,623,492
Diluted .......................................................................................................... 12,792,240 12,255,610
The Schedules referred to above and the notes thereon form an integral part of the Profit and Loss Account.
This is the Profit and Loss Account referred to in my report of even date.
Place : Mumbai

As at As at
Schedules 31st March, 2006 31st March, 2005
(Amount in Rs.) (Amount in Rs.)
SCHEDULE 1 : SHARE CAPITAL
Authorised
15,000,000 Equity Shares of Rs.10 each ........................................................................ 150,000,000 150,000,000
Issued, Subscribed and Paid-up
12,844,990 Equity Shares of Rs.10 each fully paid up ............................................. 128,449,900 116,824,500
(Previous Year 11,682,450) (of the above, 6,000 equity shares of Rs.1,000 each
allotted as fully paid bonus shares by way of capitalisation of accumulated
profits, split into 600,000 equity shares of Rs.10 each and 5,412,500 equity
shares of Rs.10 each allotted as fully paid up)
Add : Forfeited Shares .......................................................................................................... 6,050 6,050
TOTAL ......................................................................................................................................... 128,455,950 116,830,550
SCHEDULE 2 : RESERVES AND SURPLUS
Share Premium
As per last Balance Sheet .................................................................................................... 313,615,300 311,413,276
Add : Additions during the year ....................................................................................... 32,184,612 2,202,024
345,799,912 313,615,300
General Reserve
Less : Set off against Items relating to Discontinued Businesses ...................... – 19,344,907
Add: Transferred from Profit and Loss Account ......................................................... 1,621,074 –
25,459,576 23,838,502
Profit and Loss Account ....................................................................................................... 129,578,363 83,391,832

TOTAL ......................................................................................................................................... 500,837,851 420,845,634
SCHEDULE 3 : SECURED LOANS
Term Loans from Banks

State Bank of India ......................................................................................................... 72,271,763 83,405,468
Working Capital Loan from Banks

Citibank N.A. ..................................................................................................................... – 1,036,089
State Bank of India ......................................................................................................... 38,103,326 77,530,934
Interest accrued and due ................................................................................................... 676,352 –
Other Loans
Vehicle Loans ................................................................................................................... 9,802,705 4,520,872
TOTAL ......................................................................................................................................... 120,854,146 166,493,363

SCHEDULE 4 : FIXED ASSETS (Amount in Rs.)
Gross Block Depreciation and Amortisation Net Block
Particulars As at Additions Additions Deductions As at 31st Total Additions During the On Total As at 31st As at 31st
1st April, due to during the during the March, 2006 upto 31st Due to year Deletions upto 31st March, 2006 March, 2005
2005 amalgamation year year March, 2005 amalgamation March, 2006
Goodwill – – 47,076,131 – 47,076,131 – – 9,415,226 – 9,415,226 37,660,905 –

Leasehold Land 49,573,800 – – – 49,573,800 3,005,700 – 602,801 – 3,608,501 45,965,299 46,568,100
Building 101,979,411 – 264,738 7,530,876 94,713,273 26,956,121 – 3,620,507 1,809,491 28,767,137 65,946,136 75,023,290
Plant and Machinery 95,300,037 1,766,617 23,389,782 4,140,393 116,316,043 73,101,599 415,813 14,597,574 3,873,904 84,241,082 32,074,961 22,198,438
Software 37,042,649 704,360 5,716,569 1,534,432 41,929,146 22,749,702 162,714 7,445,463 1,166,525 29,191,354 12,737,792 14,292,947
Furniture, Fixture,
Equipments and
Other Assets 69,552,322 911,758 5,046,684 2,750,418 72,760,346 41,332,721 115,593 5,460,575 1,998,337 44,910,552 27,849,794 28,219,601
Vehicles 10,537,218 – 9,649,035 1,087,917 19,098,336 4,273,556 – 2,966,757 480,883 6,759,430 12,338,906 6,263,662
TOTAL (a) 363,985,437 3,382,735 91,142,939 17,044,036 441,467,075 171,419,399 694,120 44,108,903 9,329,140 206,893,282 234,573,793 192,566,038
Acquired Products 60,300,199 – – – 60,300,199 49,047,546 – 9,413,404 – 58,460,950 1,839,249 11,252,653

Owned Products 231,596,046 2,385,654 72,038,280 – 306,019,980 75,666,084 477,131 46,319,196 – 122,462,411 183,557,569 155,929,962
TOTAL (b) 291,896,245 2,385,654 72,038,280 – 366,320,179 124,713,630 477,131 55,732,600 – 180,923,361 185,396,818 167,182,615
TOTAL (a) + (b) 655,881,682 5,768,389 163,181,219 17,044,036 807,787,254 296,133,029 1,171,251 99,841,503 9,329,140 387,816,643 419,970,611 359,748,653
Previous Year 612,059,065 – 89,375,578 45,552,961 655,881,682 261,856,542 – 74,761,422 40,484,934 296,133,029 359,748,653 350,202,523
39
As at As at
SCHEDULE 5 : INVESTMENTS (Non Trade, Long Term Investments)

(at cost, unless otherwise stated)
Investments in Shares of Subsidiaries (unquoted)

Kale Consultants Australia Pty. Ltd. ................................................................................ 25,188,405 25,188,405
967,151 ordinary shares of AUD 1 each fully paid up
(Previous Year 967,151 ordinary shares of AUD 1 each fully paid up)
Kale Softech, Inc.
1,300,000 Class A voting common stock of USD 0.01 each fully paid up ....... 57,979,585 57,979,585
(Previous Year 1,300,000 Class A voting common stock of
USD 0.01 each fully paid up)
450,000, 5% Redeemable Preferred stock of USD 1 each fully paid up ......... 21,434,000 21,434,000
(Previous Year 450,000, 5% Redeemable Preferred stock of
USD 1 each fully paid up)
Antah Kale Sdn. Bhd. ............................................................................................................. 7,248,299 7,248,299
600,000 ordinary shares of RM 1 each fully paid up
(Previous Year 600,000 ordinary shares of RM 1 each fully paid up)
Synetairos Technologies Ltd. ............................................................................................ 12,859,696 12,859,696
76,548 shares of Rs. 10 each fully paid up
(Previous Year 76,548 shares of Rs.10 each fully paid up)
Kale eTravel Technologies Ltd. ......................................................................................... – 49,914,545
(Previous year 50,020 shares of Rs.10 each fully paid up)
(Refer note 11 of schedule 16)
Kale Technologies Ltd. ......................................................................................................... 70 –
1 Equity share of GBP 1 each fully paid-up
Investments in Shares (quoted)
Onward Technologies Ltd.
(Previous year 275,000 shares of Rs.10 each fully paid up) – 9,075,000
Investments in Shares of Banks (unquoted)
Rupee Co-op. Bank Ltd.
5,000 shares of Rs.10 each fully paid up ....................................................................... 50,000 50,000
Saraswat Co-op. Bank Ltd.
1,000 equity shares of Rs.10 each fully paid up ........................................................ 10,000 10,000
TOTAL ......................................................................................................................................... 124,770,055 183,759,530
Less : Provision for Diminution in the Value of Investments

Antah Kale Sdn. Bhd. ..................................................................................................... 4,000,000 4,000,000
Kale Consultants Australia Pty. Ltd. ......................................................................... 25,188,405 25,188,405
Total Provision for Dimunition in Value of Investments ........................................ 29,188,405 29,188,405
TOTAL ......................................................................................................................................... 95,581,650 154,571,125

As at As at
SCHEDULE 6 : SUNDRY DEBTORS (Unsecured)
Debts outstanding for a period exceeding six months

Considered Good ........................................................................................................... 8,029,613 72,459,558
Considered Doubtful .................................................................................................... 16,532,704 13,901,848
Other Debts
Considered Good ........................................................................................................... 185,749,483 182,778,697
Considered Doubtful .................................................................................................... 984,692 739,194
TOTAL ................................................................................................................................ 211,296,492 269,879,297
Less: Provision for Doubtful Debts .................................................................................. 17,517,397 14,641,042
(Sundry Debtors include Rs. 35,387,260 due from Subsidiaries)

(Previous Year Rs. 114,228,101)
(Maximum outstanding during the year Rs. 114,228,101)
(Previous Year Rs. 115,320,624)
TOTAL ................................................................................................................................ 193,779,095 255,238,255
SCHEDULE 7 : CASH AND BANK BALANCES
Cash in hand ............................................................................................................................ – –

Balance with Scheduled Banks
in Current Accounts * ........................................................................................................... 15,382,169 8,735,235
in Short Term Deposits ........................................................................................................ 51,635,500 3,627,188
(* Includes Rs. 198,141 being the balance in unclaimed
dividend account as at 31st March, 2006)
(Previous Year Rs. 198,462)
Balances with Non-Scheduled Banks
in current account with Kolhapur Urban Co-operative Bank Ltd. ..................... 673,283 53,298
(Maximum balance during the year Rs.764,536)
(Previous Year Rs.601,256)
in current account with Barclays Bank Plc., United Kingdom .............................. 3,333,545 4,358,902
(Maximum balance during the year GBP 231,886)
(Previous Year GBP 128,555)
in short term deposits with Barclays Bank Plc., United Kingdom ...................... 33,979 7,884
(Maximum balance during the year GBP 160,219)
(Previous Year GBP 126,273)
TOTAL ......................................................................................................................................... 71,058,476 16,782,507
SCHEDULE 8 : OTHER CURRENT ASSETS
Interest accrued on deposits ............................................................................................ 750,803 184,330

Income accrued but not due ............................................................................................ 31,905,379 16,124,536
TOTAL ......................................................................................................................................... 32,656,182 16,308,866

As at As at
SCHEDULE 9 : LOANS AND ADVANCES

(Unsecured, considered good)
Loans and Advances to Subsidiaries .............................................................................. 5,178,356 7,341,646

Advances recoverable in cash or in kind or for value to be received ............... 11,051,887 6,084,072
(Include due from Director(s) Rs.Nil)
(Previous Year Rs. Nil)
(Maximum amount due during the year Rs. Nil)
(Previous Year Rs. 746,111)
Loans and advances to Employees (including officers) ......................................... 1,108,125 1,504,974
Advance Income Tax (including Tax Deducted at Source) ................................... 10,664,281 6,223,429
Prepaid Expenses ................................................................................................................... 8,967,547 9,090,808
Other Deposits ........................................................................................................................ 24,675,822 23,315,514
TOTAL ......................................................................................................................................... 61,646,018 53,560,443
SCHEDULE 10 : CURRENT LIABILITIES AND PROVISIONS
A. Current Liabilities
Sundry Creditors
(Refer Notes to Accounts - Note No. 21.2 of Schedule 16)
(i) Total outstanding dues of Small Scale Industrial Undertakings ......... – –
(ii) Total outstanding dues of creditors other than Small Scale
Industrial Undertakings ....................................................................................... 13,659,806 25,297,613
Dues to Subsidiary Companies ................................................................................. 25,947,762 68,762,582
Advances from Clients ................................................................................................. 9,114,648 469,413
Income received in advance ...................................................................................... 8,329,164 13,883,476
Other Liabilities ............................................................................................................... 42,601,293 39,077,685
a) Unpaid Dividend ..................................................................................................... 198,141 198,462
b) Unpaid Application Money due for refund ................................................. 1,120,434 1,120,434
c) Unpaid Matured Deposits ................................................................................... – –
d) Unpaid Matured Debentures ............................................................................ – –
e) Interest accrued on (a) to (d) above ................................................................ – –
100,971,248 148,809,665
B. Provisions
Provision for Taxation ................................................................................................... 5,264,711 500,637
Proposed Dividend ......................................................................................................... 16,056,238 –
Dividend Tax ...................................................................................................................... 2,251,888 –
23,572,837 500,637
TOTAL ....................................................................................................... 124,544,085 149,310,302


SCHEDULE 11 : OTHER INCOME
Interest Income (Gross) (Tax Deducted at Source Rs.63,692) .............................. 2,638,711 1,385,441
(Previous year Rs.17,090)
Profit on Sale of Investments ............................................................................................ 7,785,605 –
Miscellaneous Income ......................................................................................................... 6,608,040 11,682,899
TOTAL ....................................................................................................... 17,032,356 13,068,340
SCHEDULE 12 : SOFTWARE DEVELOPMENT, DELIVERY AND SUPPORT EXPENSES
Salaries and Incentives ........................................................................................................ 232,366,084 167,851,387

Company’s contribution to Provident Fund and Gratuity .................................... 6,230,788 3,960,885
Staff Welfare Expenses ......................................................................................................... 1,475,915 2,176,447
Cost of Third Party Products .............................................................................................. 206,400 496,376
Consumables and Spare Parts ......................................................................................... 2,813,439 1,701,538
Cost of Software and Maintenance ................................................................................ 8,230,381 7,015,263
Communication Expenses ................................................................................................. 3,177,085 2,170,064
Consultancy Charges ............................................................................................................ 6,741,662 2,764,410
Travelling Expenses ............................................................................................................... 2,747,779 2,259,765
Foreign Travelling Expenses .............................................................................................. 6,066,754 10,164,717
Subsistence Allowance and Living Cost ....................................................................... 5,086,212 10,418,870
Data Entry Charges ............................................................................................................... 21,462,549 19,994,338
TOTAL .............................................................................................................. 296,605,048 230,974,060
SCHEDULE 13 : ADMINISTRATION, SELLING AND OTHER EXPENSES
Salaries and Allowances ...................................................................................................... 72,343,810 70,986,859

Directors Sitting Fees ........................................................................................................... 165,000 230,000
Commission to Non-Executive Directors ..................................................................... 300,000 112,625
Audit Fees ................................................................................................................................ 425,000 342,850
(Include Rs.217,468 incurred by Directors)
(Include Rs.712,140 for Directors)
Printing and Stationery ....................................................................................................... 4,085,179 3,853,320


Postage, Telephone and Courier Charges .................................................................... 10,252,355 8,977,932

Repairs and Maintenance
Buildings ............................................................................................................................ 1,240,687 666,755
Plant and Machinery ..................................................................................................... 2,125,234 2,277,856
Others ................................................................................................................................. 6,708,678 4,059,481
General Expenses ................................................................................................................... 12,466,253 11,212,731
Subscription and Membership ......................................................................................... 9,776,583 3,825,383
Rent ............................................................................................................................................. 27,979,892 23,271,518
Sales Promotion and Advertisement ............................................................................. 22,192,040 25,607,845
Rates and Taxes ....................................................................................................................... 1,605,922 2,677,085
Insurance ................................................................................................................................... 2,077,308 1,651,594
Legal and Professional Charges ....................................................................................... 8,923,562 10,199,640
Power, Fuel and Water Charges ........................................................................................ 12,318,226 9,241,586
Donation ................................................................................................................................ 500,000 –
Bank Commission and Other Charges .......................................................................... 2,078,251 2,426,105
Exchange Loss ......................................................................................................................... 4,210,818 1,778,351
Provision for Doubtful Debts ............................................................................................ 5,111,809 9,456,693
Loss on Sale of Assets ........................................................................................................... 453,498 1,595,551
Bad Debts Written Off .......................................................................................................... 4,309,080 –
Withholding Tax Written Off ............................................................................................. 273,131 677,671
TOTAL ......................................................................................................................................... 238,423,322 221,356,625
SCHEDULE 14 : PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS
Antah Kale Sdn. Bhd. ............................................................................................................. – 4,000,000

Kale Consultants Australia Pty. Ltd. ................................................................................ – 25,188,405
TOTAL ........................................................................................................................................ – 29,188,405
SCHEDULE 15 : PRIOR PERIOD ITEMS AND ITEMS RELATING TO DISCONTINUED BUSINESSES
Items Related to Discontinued Businesses ................................................................. – 19,344,907

Prior Period Items .................................................................................................................. 1,272,776 6,262,090
1,272,776 25,606,997
Less: Transfer from General Reserve ............................................................................... – 19,344,907
Prior Period Items transferred to Profit and Loss Account ................................... 1,272,776 6,262,090
TOTAL .............................................................................................................. 1,272,776 6,262,090

Schedules
SCHEDULE 16 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation of Financial Statements

The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards
issued by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
The financial statements have been prepared under the historical cost convention, on the basis of going concern and on
accrual method of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) and provisions of
Companies Act, 1956 as adopted consistently by the Company. All income and expenditure having a material bearing on
financial statements are recognised on accrual basis.
Fixed Assets
Tangible and Intangible Fixed Assets are stated at acquisition cost less accumulated depreciation. The cost comprises of
purchase price and any attributable cost of bringing the asset to its working conditions for its intended use.
Depreciation and Amortisation

Depreciation is provided on Written Down Value Method in accordance with the Companies Act, 1956, except for the items
mentioned below. All the individual items costing Rs. 5,000 or less have been fully written off.
The rates of depreciation are in accordance with Schedule XIV to the Companies Act, 1956 on a pro-rata basis except as given
below:
Leasehold Land To be amortized over the balance lease period on Straight Line Method.
UPS and DG Sets To be depreciated @ 40% on Written Down Value Method.
Software To be depreciated over estimated life of five years on Straight Line Method
Acquired and To be amortized over estimated life of asset on Straight Line Method. The estimated life is taken as five
Own Products years for most of the products of the Company.
Goodwill To be amortized over the period of five years on Straight Line Method
Investments
Investments are stated at cost. Long Term Investments include investments in wholly owned subsidiaries, which are also
valued at cost. The provision is made to recognise any decline, other than temporary, in the valuation of investments.
Borrowing Costs
Borrowing costs incurred in relation to the development of software products are capitalised as part of the cost of such
assets upto the date when such assets are ready for intended use. Other borrowing costs are charged as an expense in the
year in which these are incurred.
Revenue Recognition
Revenue from software development / software products is recognised on the basis of invoices raised as per the mile stones
reached in terms of the contracts. In case of time and material contracts, it is recognised on the basis of man hours completed
and materials used.
Revenue from Annual Maintenance Contracts is recognized proportionately over the period in which services are rendered.
Revenue from processing charges is recognised on the basis of the work completed.
Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transactions.
Monetary assets and liabilities are revalued at the rate as on the date of the Balance Sheet.
Non monetary foreign currency assets are carried at historical cost.

Schedules
Retirement Benefits to Employees
a. Contribution in respect of payments to Employees’ Provident Fund is charged to revenue. The Company has contributed
to Employees’ Provident Fund maintained by Government of India being the equal amount of contribution as made by
employees.
b. In accordance with the Payment of Gratuity Act, 1972, the Company provides the benefit retirement plan as covered in the
ICICI Prudential Life Insurance Company Limited Gratuity Scheme and the contribution to the same is charged to revenue.
Leave encashment is provided as per the rules of the Company.
Income Tax
Income Tax comprises current tax provision and provision for fringe benefit tax. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to
be received or settled. As on the balance sheet date the timing difference between book and taxable profit has resulted in a
deferred tax asset. However on a conservative basis, the Company has not recognized the same in the books of accounts.
Earnings Per Share

Basic Earnings Per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year. The diluted earnings per share is calculated based
on the weighted average number of shares considered for deriving basic earning per share and also the weighted average
number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are
reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
General
Accounting policies not specifically referred to are consistent with the Indian Generally Accepted Accounting Principles (GAAP).
II. NOTES TO ACCOUNTS
1. Contingent Liabilities
Contingent Liabilities not provided for include guarantees given by the Company’s bankers outstanding to the tune of Rs
7,707,188 as at 31st March, 2006 in favour of various parties (Previous year Rs. 9,169,023).
2. Quantitative Details
The Company is engaged in Computer Software Development. The sale of duly produced software is of such nature, which
cannot be expressed in generic unit. Therefore, it is not possible to give quantitative details of sales and certain
information as required under paragraphs 3, 4C, 4D of Part II, Schedule VI of the Companies Act, 1956.
3. Activity in Foreign Currency (Amount in Rs.)

Particulars For the year ended For the year ended
31st March, 2006 31st March, 2005
Earnings in Foreign Currency 507,794,271 424,118,416
Outgo in Foreign Exchange
CIF value of Capital Goods Imported 34,038 180,982
Capital Goods - 173,247
Consultancy and Professional Charges 1,179,925 2,529,169
Travelling and Other Expenses (Net) 16,497,508 22,260,872
Advances to Employees and Subsidiaries 5,178,356 1,259,820
UK Branch Expenses 59,356,358 98,513,154

Schedules
4. Managerial Remuneration u/s 198 of the Companies Act, 1956 to Managing Director
(Amount in Rs.)
Salary 4,222,094 2,931,250
Perquisites 718,646 693,750
Commission - 200,000
5. Remuneration to Non-Executive Directors (Amount in Rs.)

Commission 300,000 112,625
Sitting Fees 165,000 230,000
6. Directors Remuneration (Amount in Rs.)

Computation of net profit in accordance with section 198 For the year ended For the year ended
read with sections 349 & 350 of the Companies Act, 1956 31st March, 2006 31st March, 2005
Net Profit as per Profit and Loss Account . 69,620,960 7,535,175
Add: Remuneration and Commission to Directors 5,240,740 3,937,625
Depreciation as per books of accounts 44,108,903 29,623,962
Provision for doubtful debts 5,111,809 9,456,693
Bad Debts Written Off 4,309,080 –
Loss on sale of assets 453,498 1,595,551
Less: Depreciation as per Section 350 of the Companies Act, 1956 44,108,903 29,623,962
Net Profit on which commission is payable 84,736,087 22,525,044
Commission @ 1% to the Managing Director – 200,000
Commission @ 0.5% to the Non-Executive Directors 423,680 112,625
Restricted to Rs. 100,000/- for each Non-Executive Director 300,000 –
7. Auditors Remuneration (Amount in Rs.)

Audit Fees 425,000 342,850
Other services (Tax Audit and Certification) 47,500 27,500
Out of pocket expenses 14,912 3,076
8. Secured Loans
• Term Loan facilities sanctioned from State Bank of India, are secured by way of mortgage by deposit of title deeds in
respect of office premises situated at a) 1st Floor, Sharada Arcade, Satara Road, Pune b) 70 “C” Cross Road, MIDC, Marol,
Andheri (E), Mumbai c) Kale Plaza, Satara Road, Pune; and hypothecation of furniture and fixtures situated at these premises
and d) Assignment of lease rentals receivable on premises at Kale Plaza, Satara Road, Pune.
• Working Capital facility sanctioned from State Bank of India, is secured by hypothecation of the book debts of the Company
and charge over fixed assets and office premises situated at, a) 1st Floor, Sharada Arcade, Satara Road, Pune b) 70 “C” Cross
Road, MIDC, Marol, Andheri (E), Mumbai c) Kale Plaza, Satara Road, Pune, and hypothecation of furniture and fixtures situated
at these premises and d) Assignment of lease rentals receivable on premises at Kale Plaza, Satara Road, Pune.

Schedules
• The creation of charge by way of depositing title deeds in respect of a) 70 “C” Cross Road, MIDC, Marol, Andheri (E), Mumbai
and b) Kale Plaza, Satara Road, Pune has been completed.
• Vehicle Loans are secured by first charge on vehicle acquired from the proceeds of respective loans.
9. Taxes
Provision for current taxes, Fringe Benefit Tax and Wealth Tax has been made in the books of accounts. Accounting Standard
22 issued by The Institute of Chartered Accountants of India on Accounting for Taxes became mandatory effective April 1,
2001. As on the balance sheet date the timing difference between book and taxable profit has resulted in a deferred tax asset.
However on a conservative basis, the Company has not recognized the same in the books of accounts.
10. Joint Venture

As per the audited statements received there are no contingent liabilities in the books of the Joint Venture, Antah Kale Sdn.
Bhd., Malaysia as at the date of the Balance Sheet.
The aggregate amount of share capital commitment in the Joint Venture viz. Antah Kale Sdn. Bhd., Malaysia is of RM 600,000
which has already been fulfilled. There is no outstanding commitment as on the date of the Balance Sheet.
11. Amalgamation
At the Extraordinary General Meeting of the Company held on 12th March, 2005, the shareholders passed a resolution
approving the amalgamation of Kale eTravel Technologies Limited (KTT), wholly owned subsidiary of the Company with Kale
Consultants Limited. KTT was in the business of providing software solutions to travel industry. The Company had filed a
petition with the Hon’ble High Court of Judicature at Bombay for approval of the amalgamation and received the same on
15th July, 2005 to amalgamate KTT, with the Company w.e.f. 1st April 2005. As per Accounting Standard 14, the method used
for amalgamation was Purchase Method. As a result, Goodwill to the tune of Rs. 47,076,131 has been generated and the same
is being amortised over a period of five years. The current year’s figures include the figures of the amalgamated entity hence
the same are not comparable with the corresponding figures for the previous year.
12. Segmental Reporting

As a result of the aforementioned amalgamation, the Company is an integrated business unit which addresses the Travel
and Transportation vertical. This, in context of Accounting Standard 17 on segment reporting issued by The Institute of
Chartered Accountants of India, is considered to constitute one single segment.
13. Intangible Assets

The details of Intangible Assets as required to be disclosed as per Accounting Standard 26 issued by The Institute of Chartered
Accountants of India are reflected in Schedule 4 of the Financial Statements. The Intangible Assets comprise of acquired and
internally generated software products described as “Acquired Products” and “Owned Products” respectively. The addition to
the internally generated software products is towards enhancing and upgrading the products with respect to their capabilities
and features to cater to the needs of the market.
14. Employees’ Stock Option Plan (ESOP)

During the financial year 2005-06, a total number of 185,000 options (Previous year 612,300) were granted to the employees
of its subsidiaries. Each option is eligible for conversion into one fully paid up equity shares of Rs. 10 each.
A total number of 983,330 options have vested till 31st March, 2006 (Previous year 500,136 options).
A total number of 399,722 options (Previous year 296,550 options) have lapsed till 31st March, 2006 on account of resignation
of employees from the Company.
During the financial year 2005-06, 462,540 options were exercised (Previous year 83,550) giving rise to 462,540 fully paid up
equity shares of Rs. 10/- each. Out of these, 19,377 equity shares are in the process of being listed on the stock exchanges. All
the remaining 443,163 equity shares have been listed on the stock exchanges.

Schedules
15. Impairment of Assets

The Accounting Standard 28 “Impairment of Assets” issued by The Institute of Chartered Accountants of India comes into
effect in respect of accounting period commencing on or after 1st April, 2004. The amount of impairment of losses during the
current financial year is nil.
16. Provisions, Contingent Assets & Liabilities

In respect of provisions, contingent assets and contingent liabilities as required by Accounting Standard 29, the carrying
amount at the beginning towards provision for employee dues, statutory dues and expenses were Rs.22,198,644. The additional
provision made for the year was Rs. 11,763,843 and payments made during the year were Rs. 11,929,920. The carrying amount
at the end of the year was Rs. 22,032,567
• The Company is following accrual method of accounting in respect of liabilities and provisions. The provisions, have been
made on actual basis wherever information is available and in other cases the same is estimated on the basis of past
records.
• The expected timing of any resulting outflow and economic benefits depends on contractual terms, obligation and such
other factors depending on case to case basis.
• The management expects no reimbursements.
• The Company has availed bank guarantees amounting to Rs. 7,707,188, however, the Company does not expect any
estimated financial effect resulting into liability, contingent or otherwise.
17. Preferential Allotment

The Board of Directors of the Company on 10th June, 2005 allotted 700,000 equity shares arising out of conversion of warrants
to the promoters of the Company on preferential basis. The shareholders in the Extra Ordinary General Meeting of the
Company held on 12th December, 2003 had passed a special resolution approving the issue of equity shares and warrants to
the promoters of the Company. An upfront consideration of Rs. 2,730,000 was received in the year 2003-04 towards preferential
allotment of 700,000 warrants.
The Company received balance amount of Rs. 24,535,000 in respect of these equity shares before allotment of the equity
shares. The said proceeds were utilised for the working capital needs of the Company.
18. Subsidiary Company

During the year the management has reviewed the operations of its subsidiary company, viz. Kale Consultants Australia Pty.
Ltd. Since Kale India now exclusively focuses on the Travel and Transportation business, the management does not see any
synergies between the Indian and Australian operations to merit any additional investment. Therefore the Company has
decided to wind up its operations in Australia. An application for winding up has been made to Reserve Bank of India and
its approval is awaited.
19. Related Party Transactions (Amount in Rs.)

Sr.No. Particulars Subsidiaries Joint Venture Key Management
Personnel
1 Services rendered 99,724,747 2,341,219
2 Services received 21,509,222
3 Claims raised for expenses 16,452,447
4 Claims received for expenses 10,210,941
5 Remuneration(*) 4,940,740
Debit Balances outstanding :
1 Services rendered (net) 15,201,232
2 Claims for expenses (net) 150,678 432,700
(*) Remuneration is paid to the Managing Director

Subsidiaries : Kale Softech, Inc., USA

Kale Consultants Australia Pty. Ltd., Australia
Kale Technologies Ltd., UK
Synetairos Technologies Ltd., India
Joint Venture : Antah Kale Sdn. Bhd., Malaysia
Key Management Personnel : Narendra Kale, Chairman

Vipul Jain, Managing Director
20. Borrowing Costs

During the year, no amount for the interest and other anciliary costs in respect of loan for development of software
products has been capitalized as per Accounting Standard 16 regarding Borrowing Costs issued by The Institute of
Chartered Accountants of India. (Previous year Rs.Nil).
21. Others
1. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for
Rs.11,421,050 (Previous year Rs. 305,830).
2. Small Scale Industrial Undertakings have been identified by the Company on the basis of information provided by its
suppliers. There is no Small Scale Industrial Undertaking to whom amount is outstanding for more than 30 days as at
31st March, 2006. (Previous Year Rs. Nil).
3. Profits/(Losses) of subsidiary companies are not dealt with in the books of accounts of the Company.
4. In the opinion of the Board, the current assets, loans and advances have been stated at a value realisable in the ordinary
course of business.
5. In respect of UK branch of the Company the accounts of the branch are incorporated on transaction basis as per the
authenticated information / statements and records submitted by the UK branch.
6. Previous Year figures have been regrouped and rearranged wherever necessary.
Place : Mumbai

Balance Sheet Abstract
Balance Sheet Abstract and Company’s General Business Profile (Part IV)
I Registration Details
Registration No. 41033 State Code 11
Balance Sheet Date 31st March, 2006
II Capital raised during the year (Amount in Rs.’000)
Public Issue Nil Rights Issue Nil
Bonus Shares Nil Private Placement Nil
ESOPs 4,625 Preferential Allotment 7,000
III Position of Mobilisation and Deployment of Funds (Amount in Rs.’000)
Total Liabilities 750,148 Total Assets 750,148
Sources of Funds
Paid-up Capital 128,456 Reserves and Surplus 500,838
Secured Loans 120,854 Unsecured Loans Nil
Application of Funds
Net Fixed Assets 419,971 Investments 95,582
Net Current Assets 234,596 Miscellaneous Nil

Expenditure
Accumulated Losses Nil
IV Performance of the Company (Amount in Rs.’000)
Total Income 642,871 Total Expenditure 462,990
Profit/(Loss) before Tax 69,621 Profit/(Loss) after Tax 64,843
Earnings per Share (Rs.) 5.33 Dividend (%) 12.50
V Generic names of principal services of the Company (as per monetary terms)
Item Code No. (ITC Code) 852490
Product Description Computer Software


Cash Flow Statement 31st March, 2006 31st March, 2005
Cash Flow from Operating Activities ......................................

Net Profit / (Loss) Before Tax (Excluding Profit / loss on
revaluation of cash and cash equivalent) ............................................. 69,620,955 7,562,894
Adjustments for :
Add : Depreciation ....................................................................................... 35,387,798 29,623,962
Amortisation of Product Cost ...................................................... 56,209,731 45,137,460
Interest paid ....................................................................................... 9,941,613 8,371,306
Loss on sale of Fixed Assets .......................................................... 453,498 1,595,551
Prior Period expenses (net) .......................................................... 1,272,776 (6,262,090)
Provision for Dimunition in value of Investments .............. – 29,188,405
Less : Other Income (Interest and Dividend Received) ................. 2,638,711 1,385,441
Miscellaneous Income .................................................................... 14,393,645 11,682,899
Exchange Loss on revaluation Cash And Cash equivalent – 27,719
Operating Profit/(Loss) Before Extra-ordinary Items ........... 155,854,015 102,121,428
Extra-ordinary Items
Items relating to Discontinued Businesses .......................................... – (19,344,907)
Operating Profit/(Loss) Before Working Capital Changes ..... 155,854,015 82,776,521
Adjustment for : ...............................................................................................
(Increase)/Decrease in Inventory .............................................................. – 489,320
(Increase)/Decrease in Sundry Debtors ................................................. 61,459,160 (129,648,228)
(Increase)/Decrease in Loans and Advances ....................................... (8,085,575) (421,043)
(Increase)/Decrease in Other Current Assets ....................................... (16,347,317) (8,218,156)
Increase/(Decrease) in Current Liabilities and Provisions .............. (24,766,217) 85,509,662
Cash Generated from Operations ........................................... 168,114,066 30,488,076
Less : Interest paid ....................................................................................... (9,941,613) (8,371,306)
Direct tax paid ................................................................................... (4,778,000) (15,000)
Add : Miscellaneous Income .................................................................... 14,393,645 11,682,899
Net Cash Flow from Operating Activities (A) ......................... 167,788,098 33,784,670
Cash Flow from Investing Activities .......................................
Additions to Fixed Assets (including Capital WIP) ............................. (121,873,476) (88,144,858)
Proceeds from sale of Fixed Assets .......................................................... 7,261,398 3,472,475
(Purchase) / Sale of Investments ............................................................... 9,074,930 (8,013,750)
Impact of Amalgamation ............................................................................. 12,253,640 –
Less : Dividend Paid including Dividend Tax .................................... 18,308,126 –
Add: Other Income (Interest and Dividend Received) ................. 2,638,711 1,385,441
Net Cash used in Investing Activities (B) ............................... (108,952,924) (91,300,692)
Cash Flow from Financing Activities
Proceeds from issue of Share Capital ..................................................... 41,080,012 3,037,524
Increase/(Decrease) in Secured Loans ................................................... (45,639,217) 15,932,233
Net Cash from Financing Activities (C ) .................................. (4,559,205) 18,969,757
NET CASH (A+B+C) .................................................................... 54,275,969 (38,546,265)
Cash and Cash Equivalents at the beginning of the period .......... 16,782,507 55,328,772
Cash and Cash Equivalents at the end of the period ....................... 71,058,476 16,782,507
Net Increase/(Decrease) in Cash and Cash Equivalents ........ 54,275,969 (38,546,265)
Place : Mumbai

Consolidated Financial Statements
Auditor’s Report
To,
The Board of Directors,
Kale Consultants Limited,
Pune
I have examined the attached Consolidated Balance Sheet of Kale Consultants Limited, its subsidiaries and a joint venture as at
31st March 2006, the Consolidated Profit & Loss Account and the Consolidated Cash Flow Statement for the year then ended.
These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on
these financial statements based on my audit. I have conducted my audit in accordance with generally accepted auditing standards
in India. These standards require that I plan and perform the audit to obtain reasonable assurance whether the financial statements
are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material
misstatements. An audit includes, examining on 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 statements. I believe that my audit provides a reasonable basis for my opinion.
I further report that in respect of the following subsidiaries/JV except Synetairos Technologies Limited, I did not carry out the
audit. These financial statements have been certified by Management and have been furnished to me, and my opinion, insofar as
it relates to the amounts included in respect of the subsidiaries, is based solely on these certified financial statements. Since the
financial statements for the financial year ended 31st March, 2006 were compiled and certified by management, any adjustments
to their balances could have consequential effects on the attached consolidated financial statements. The details of assets and
revenues in respect of the subsidiaries and a joint venture are given below:
(Amount in Rs.)
Name of the Subsidiary/JV Total Assets Total Revenue
1 Kale Softech Inc. 15,674,820 85,143,715
2 Antah Kale Sdn. Bhd. 6,732,859 4,437,075
3 Kale Consultants Australia Pty. Limited 782,204 6,400,115
4 Kale Technologies Limited 10,748,651 98,536,114
5 Synetairos Technologies Limited 17,404,331 34,481,215
I report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of
the Accounting Standard (AS) 21, Consolidated Financial Statements, issued by The Institute of Chartered Accountants of India,
and on the basis of the separate audited/certified financial statements of Kale Consultants Limited and its subsidiaries and a joint
venture included in the Consolidated Financial Statements.
I report that on the basis of the information and explanations given to me and on the consideration of the separate audit report
on individual audited statements and financial statements certified by the management, I am of the opinion that :
a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of Kale Consultants Limited and
its subsidiaries and a joint venture as at 31st March, 2006;
b) the Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations of Kale Consultants
Limited and its subsidiaries and a joint venture for the year then ended; and
c) the Consolidated Cash Flow Statement gives a true and fair view of the cash flow of Kale Consultants Limited and its subsidiaries
and a joint venture to the extent applicable.
D. G. Kurundwadkar

As at As at
Consolidated Balance Sheet 31st March, 2006 31st March, 2005
SOURCES OF FUNDS
Share Capital .............................................................................................. 1 128,455,950 116,830,550
Reserves and Surplus ............................................................................. 2 452,822,947 363,146,986
Partly Paid Warrants ................................................................................ – 2,730,000
581,278,897 482,707,536
Loan Funds .............................................................................
Secured Loans ........................................................................................... 3 120,854,146 166,493,363
Unsecured Loans ...................................................................................... 4 1,000,000 1,000,000
Minority Interest ....................................................................................... 1,766,838 1,384,250
Deferred Tax Liability .............................................................................. – 26,267
TOTAL ..................................................................................... 704,899,881 651,611,416
APPLICATION OF FUNDS ......................................................

Goodwill .................................................................................................. 1,623,861 38,775,123
Fixed Assets ................................................................................................ 5
Gross Block ................................................................................................. 825,553,415 678,077,982
Less: Accumulated Depreciation ....................................................... 216,401,735 179,844,630
Less : Amortisation of Product Cost ................................................. 180,923,361 124,713,630
Net Block .................................................................................................. 428,228,319 373,519,722
Capital WIP .................................................................................................. – 2,385,654
428,228,319 375,905,376
Deferred Tax Asset ................................................................................... 21,103 –
Investments ........................................................................... 6 60,000 9,135,000

Current Assets, Loans and Advances ..................................
Sundry Debtors ....................................................................................... 7 201,863,236 279,257,017
Cash and Bank Balances ....................................................................... 8 92,486,209 43,807,399
Loans and Advances .............................................................................. 9 61,280,296 59,111,945
Other Current Assets ............................................................................. 10 44,896,894 21,056,098
TOTAL ..................................................................................... 400,526,635 403,232,459
Less: Current Liabilities and Provisions ............................. 11
Current Liabilities .................................................................................... 99,089,122 174,772,801
Provisions .................................................................................................. 26,470,915 663,741
Net Current Assets ................................................................ 274,966,598 227,795,917
TOTAL ............................................................................... 704,899,881 651,611,416
Significant Accounting Policies and Notes to Accounts ......... 17
The Schedules referred to above and the notes thereon form an integral part of the Consolidated Balance Sheet.
This is the Consolidated Balance Sheet referred to in my report of even date.
Place : Mumbai


Consolidated Profit and Loss Account 31st March, 2006 31st March, 2005
Income
Net Sales/Income from Operations .................................................. 733,738,158 631,537,845
Other Income ............................................................................................ 12 18,525,378 13,468,623
TOTAL ...................................................................................... 752,263,536 645,006,468
Expenses ...............................................................................
Software Development, Delivery and Support Expenses ....... 13 351,375,653 286,839,617
Administration, Selling and Other Expenses ................................ 14 285,852,803 299,275,948
TOTAL ..................................................................................... 637,228,456 586,115,565
Less: Product Development Cost ....................................................... 72,038,280 68,580,357
Total Operating Expenses .................................................... 565,190,176 517,535,208
Operating Profit / (Loss) (PBIDT) ......................................... 187,073,360 127,471,260
Depreciation and Amortisation ......................................................... 103,768,966 79,390,517
Preliminary Expenses Written Off ..................................................... – 23,665
Finance Expenses ..................................................................................... 10,002,205 8,789,031
Profit/ (Loss) Before Taxes .................................................... 73,302,189 39,268,047
Loss on Sale of Investment .................................................................. – 13,878,599
Provision for Diminution in Value of Investments ...................... 15 – 29,188,405
Profit/ (Loss) Before Taxes .................................................... 73,302,189 (3,798,957)
Provision for Taxes
Current Taxes ...................................................................................... 4,410,839 140,000
Fringe Benefit Tax ............................................................................. 3,150,000 –
Deferred Tax Expense/(Benefit) .................................................. (47,370) 26,267
Profit After Tax Before Translation Adjustment ................ 65,788,720 (3,965,224)
Prior Period Items .................................................................................... 16 (1,154,463) 7,238,947
Minority Interest ....................................................................................... 382,589 27,989
Profit After Tax and Translation Adjustment ..................... 66,560,594 (11,232,160)
Balance Brought Forward ..................................................................... (4,463,943) 6,768,217
Amount Available for Appropriation ................................. 62,096,651 (4,463,943)
Transferred to General Reserve .......................................................... 1,621,074 –
Dividend
Proposed Dividend .......................................................................... 16,056,238 –
Dividend Tax ....................................................................................... 2,251,888 –
Net Income Transferred to Balance Sheet .......................... 42,167,451 (4,463,943)
Earnings Per Share ................................................................
Basic .................................................................................................. 5.40 (0.96)
Diluted .................................................................................................. 5.23 (0.91)
No. of Shares Used in Computing Earning per Share .......
Basic .................................................................................................. 12,402,156 11,623,492
Diluted .................................................................................................. 12,792,240 12,255,610
The Schedules referred to above and the notes thereon form an integral part of the Consolidated Profit and Loss Account.
This is the Consolidated Profit and Loss Account referred to in my report of even date.
Place : Mumbai

As At As At

Authorised Capital
15,000,000 Equity Shares of Rs.10 each ........................................................................ 150,000,000 150,000,000
Issued, Subscribed and Paid-up ..................................................................
12,844,990 Equity Shares of Rs. 10 each fully paid up (Previous Year 128,449,900 116,824,500
11,682,450)
(of the above 6,000 equity shares of Rs. 1,000 each allotted as fully paid bonus
shares by way of capitalisation of accumulated profits, split into 600,000
equity shares of Rs. 10 each and 5,412,500 equity shares of Rs. 10 each allotted
as fully paid up)
Add : Forfeited Shares .......................................................................................................... 6,050 6,050
TOTAL ....................................................................................................... 128,455,950 116,830,550
SCHEDULE 2 : RESERVES AND SURPLUS ....................................................

Share Premium
Add : Received during the year ........................................................................................ 32,184,612 2,202,024
345,799,912 313,615,300
General Reserve
Add/(Less) : Transferred from/(to) Profit and Loss Account ................................. 1,621,074 (19,344,907)
25,459,576 23,838,502
Capital Reserve ....................................................................................................................... 29,188,405 29,188,405

Profit and Loss Account ....................................................................................................... 42,167,451 (4,463,943)
Translation Reserve ............................................................................................................... (1,898,436) 968,722
Impact of Amalgamation .................................................................................................... 12,106,039 –
52,375,054 (3,495,221)
TOTAL ............................................................................................................. 452,822,947 363,146,986
SCHEDULE 3 : SECURED LOANS ..................................................................
Term Loans from Banks

State Bank of India ................................................................................................................. 72,271,763 83,405,468
Working Capital Loan from Banks

Citibank N.A. ............................................................................................................................. – 1,036,089
State Bank of India ................................................................................................................. 38,103,326 77,530,934
Interest accrued and due ................................................................................................... 676,352 –
Other Loans
Vehicle Loans ........................................................................................................................... 9,802,705 4,520,872
TOTAL ............................................................................................................. 120,854,146 166,493,363
SCHEDULE 4 : UNSECURED LOANS

Loan from Director ................................................................................................................ 1,000,000 1,000,000
TOTAL ....................................................................................................... 1,000,000 1,000,000

SCHEDULE 5 : FIXED ASSETS (Amount in Rs.)
Particulars As at Additions Deductions As at 31st Upto 31st During the On Deletions Total As at 31st As at 31st
1st April, 2005 during the during the March, 2006 March, 2005 year upto 31st March, 2006 March, 2005
year year March, 2006
Goodwill 12,000,000 47,076,131 – 59,076,131 2,400,000 11,815,226 – 14,215,226 44,860,905 9,600,000

Leasehold Land 49,756,542 – 182,742 49,573,800 3,155,346 635,897 182,742 3,608,501 45,965,299 46,601,196
Improvement
Building 101,979,411 264,738 7,530,876 94,713,273 26,956,121 3,620,507 1,809,491 28,767,137 65,946,136 75,023,290
Plant and Machinery 97,298,506 25,782,569 4,534,283 118,546,792 74,347,864 15,411,513 4,136,208 85,623,169 32,923,623 22,950,642
Software 37,152,983 6,420,929 1,534,432 42,039,480 22,860,037 7,608,177 1,166,525 29,301,689 12,737,791 14,292,946
Furniture, Fixture,
Equipments and
Other Assets 72,991,519 6,201,017 3,007,112 76,185,424 44,147,972 6,127,308 2,148,697 48,126,583 28,058,841 28,843,547
Vehicles 11,620,113 9,649,035 2,170,812 19,098,336 5,283,170 3,034,727 1,558,467 6,759,430 12,338,906 6,336,943
Total (a) 382,799,074 95,394,419 18,960,257 459,233,236 179,150,510 48,253,355 11,002,130 216,401,735 242,831,501 203,648,564
Acquired Products 60,300,199 – – 60,300,199 49,047,546 9,413,404 – 58,460,950 1,839,249 11,252,653
Owned Products 231,596,046 74,423,934 – 306,019,980 75,666,084 46,796,327 – 122,462,411 183,557,569 155,929,962
Total (b) 291,896,245 74,423,934 – 366,320,179 124,713,630 56,209,731 – 180,923,361 185,396,818 167,182,615
Total (c) = (a) + (b) 674,695,319 169,818,353 18,960,257 825,553,415 303,864,140 104,463,086 11,002,130 397,325,096 428,228,319 370,831,179
Capital Work in Progress

[Including Advances] – 2,385,654
Total (d) 428,228,319 373,216,833
Impact of Amalgamation of
Kale eTravel Technologies Ltd.
with Kale Consultants Ltd. (e)* 3,382,663 (3,382,663) – – 694,120 (694,120) – – – 2,688,543
Grand Total (f)= (d)+(e) 678,077,982 166,435,690 18,960,257 825,553,415 304,558,260 103,768,966 11,002,130 397,325,096 428,228,319 375,905,376
*The gross block as at 1st April, 2005 includes the figures of the consolidated entity of Kale eTravel Technologies Limited (consolidating its wholly owned subsidiary Kale Technologies Limited,
formerly known as Cognosys Software Limited, UK). During the year Kale eTravel Technologies Limited has been amalgamated into Kale Consultants Limited, and hence Kale Technologies Limited,
57
has become a direct subsidiary of Kale Consultants Limited. This impact is reflected in the figures shown against (e) above.
As At As At
SCHEDULE 6 : INVESTMENTS (Non Trade)

(At cost, unless otherwise stated)
Investments in Shares (Quoted)
Onward Technologies Ltd ................................................................................................. – 9,075,000
(Previous Year 275,000 shares of Rs. 10 each fully paid up)
Investments in Shares of Banks (Unquoted)
Rupee Co-op. Bank Ltd. ........................................................................................................ 50,000 50,000
5,000 shares of Rs. 10 each fully paid up
Saraswat Co-op. Bank Ltd. ................................................................................................... 10,000 10,000
1,000 Equity Shares of Rs. 10 each fully paid up
TOTAL ............................................................................................................. 60,000 9,135,000
SCHEDULE 7 : SUNDRY DEBTORS

(unsecured, considered good)
Debts outstanding for a period exceeding six months ......................................... 16,601,495 72,459,558
Other Debts .............................................................................................................................. 185,261,741 206,797,459
TOTAL ....................................................................................................... 201,863,236 279,257,017

Cash on hand ........................................................................................................................... 51,223 13,220
Bank Balances
with Scheduled Banks
in Current Accounts ...................................................................................................... 16,393,673 10,518,973
in Short Term Deposits ................................................................................................. 51,635,500 3,717,188
with Other Banks
in Current Accounts ...................................................................................................... 24,371,834 29,550,134
in Short Term Deposits ................................................................................................. 33,979 7,884
TOTAL .............................................................................................................. 92,486,209 43,807,399
SCHEDULE 9 : LOANS AND ADVANCES

(Unsecured, considered good)
Advances recoverable in cash or in kind or for value to be received ............... 11,765,557 17,485,544
Loans and advances to Employees (including officers) ......................................... 1,108,125 1,504,974
Advance Income Tax (including Tax Deducted at Source and Service Tax) ... 14,649,762 7,117,525
Prepaid Expenses ................................................................................................................... 9,055,013 9,483,388
Other Deposits ........................................................................................................................ 24,701,839 23,520,514
TOTAL .............................................................................................................. 61,280,296 59,111,945

Interest accrued on deposits ........................................................................................... 750,803 184,330
Income accrued but not due ........................................................................................... 43,215,270 20,750,386
Other Assets ............................................................................................................................ 930,821 121,382
TOTAL ............................................................................................................. 44,896,894 21,056,098

As At As At
Schedules 31st March 2006 31st March 2005
SCHEDULE 11 : CURRENT LIABILITIES

Sundry Creditors
Small Scale Industrial Undertakings ...................................................................... – –
Others ................................................................................................................................. 14,245,363 112,156,111
Advances from Clients ......................................................................................................... 16,241,048 7,448,613
Income received in advance ............................................................................................. 11,935,405 17,404,845
Other Liabilities ...................................................................................................................... 55,348,731 36,444,336
Unpaid Dividend .................................................................................................................... 198,141 198,462
Unpaid Application Money due for refund ................................................................. 1,120,434 1,120,434
TOTAL .............................................................................................................. 99,089,122 174,772,801
Provision for Taxation .......................................................................................................... 8,162,789 663,741

Proposed Dividend .............................................................................................................. 16,056,238 –
Dividend Tax ........................................................................................................................... 2,251,888 –
TOTAL ............................................................................................................. 26,470,915 663,741

SCHEDULE 12 : OTHER INCOME ...................................................................

Interest ....................................................................................................................................... 2,791,198 1,526,523
Profit on Sale of Investments ............................................................................................ 7,785,605 –
Miscellaneous Income ......................................................................................................... 7,948,575 11,942,100
TOTAL .............................................................................................................. 18,525,378 13,468,623

Cost of Third Party Products .............................................................................................. 206,400 4,622,339
Consumables and Spare Parts ......................................................................................... 2,813,439 1,714,995
Cost of Software and Maintenance ................................................................................ 8,230,381 7,037,956
Communication Expenses ................................................................................................. 3,177,085 2,170,064
Consultancy Charges ............................................................................................................ 6,741,662 7,789,478
Subsistence Allowance and Living Cost ....................................................................... 5,086,212 2,153,265
Data Entry Charges ............................................................................................................... 21,462,549 19,994,338
TOTAL .............................................................................................................. 351,375,653 286,839,617

Directors Sitting Fees ........................................................................................................... 165,000 230,000
Commission to Non-Executive Directors ..................................................................... 300,000 112,625
Audit Fees ................................................................................................................................. 1,117,639 1,407,125


Travelling Expenses .............................................................................................................. 7,793,802 13,808,596

Foreign Travelling Expenses ............................................................................................. 14,998,735 14,497,752
Printing and Stationery ...................................................................................................... 4,178,185 4,066,990
Communication, Postage, Telephone and Courier Charges ................................ 11,624,988 11,489,955
Buildings ............................................................................................................................ 1,243,685 677,595
Plant and Machinery ..................................................................................................... 2,155,044 2,333,884
Others ................................................................................................................................. 6,753,622 4,474,860
Subscription and Membership ........................................................................................ 6,700,290 3,825,383
General Expenses ................................................................................................................. 14,151,854 17,873,626
Rent ............................................................................................................................................ 32,069,515 30,958,300
Sales Promotion and Advertisement ............................................................................ 8,281,373 28,452,991
Rates and Taxes ...................................................................................................................... 1,647,245 2,894,509
Insurance .................................................................................................................................. 2,669,748 2,477,468
Legal and Professional Charges ...................................................................................... 8,892,098 11,525,435
Power, Fuel and Water Charges ....................................................................................... 12,457,743 10,232,957
Donation .................................................................................................................................. 500,000 –
Bank Commission and Other Charges ......................................................................... 2,145,681 2,490,994
Exchange Loss ........................................................................................................................ 4,210,818 2,215,824
Provision for Doubtful Debts ........................................................................................... 5,111,809 11,307,369
Loss on Sale of Assets ......................................................................................................... 506,600 1,709,661
Bad Debts Written Off ......................................................................................................... 4,454,212 –
Withholding Tax Written Off ............................................................................................. 273,131 677,671
TOTAL .............................................................................................................. 285,852,803 299,275,948
SCHEDULE 15 : EXCEPTIONAL ITEMS

Dimunition in Value of Investments ...............................................................................
Antah Kale Sdn. Bhd. ............................................................................................................. – 4,000,000
Kale Consultants Australia Pty. Ltd. ................................................................................. – 25,188,405
TOTAL .............................................................................................................. – 29,188,405
SCHEDULE 16 : PRIOR PERIOD ITEMS

Items relating to discontinued business ...................................................................... – 19,344,907
Prior Period Items .................................................................................................................. 1,154,463 7,238,947
1,154,463 26,583,854
Less: Transfer from General Reserve ............................................................................... – 19,344,907
TOTAL .............................................................................................................. 1,154,463 7,238,947

Schedules
SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Accounting / Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention on a going concern and accrual basis of accounting
and comply in all material respects with the mandatory Accounting Standards issued by The Institute of Chartered Accountants
of India (ICAI) and the relevant provisions of the Companies Act, 1956. All amounts are stated in Indian Rupees unless otherwise
stated.
In accordance with Accounting Standard 21 “Consolidated Financial Statements” issued by The Institute of Chartered
Accountants of India, the Consolidated Financial Statements of Kale Consultants Limited include the financial statements of
all its subsidiaries viz. Kale Softech, Inc., Kale Consultants Australia Pty. Limited, Kale Technologies Limited, Synetairos
Technologies Limited and jointly controlled entity Antah Kale Sdn. Bhd.
2. The particulars of subsidiaries are as follows :
Sr. Name of the Subsidiary Country of Incorporation Proportion of Ownership as on
No. 31st March, 2006
1 Kale Softech, Inc. United States of America 100%
2 Kale Consultants Australia Pty. Limited Australia 100%
3 Kale Technologies Limited United Kingdom 100%
4 Synetairos Technologies Limited India 89.23%
The particulars of jointly controlled entity are as follows :
1 Antah Kale Sdn. Bhd. Malaysia 60%
The reporting date for all the above companies is 31 March of the Financial Year.
3. Amalgamation of Kale eTravel Technologies Limited with Kale Consultants Ltd.
With effect from 1st April, 2005, Kale eTravel Technologies Limited (KTT), a wholly owned subsidiary has been amalgamated
with its holding company Kale Consultants Limited. As per Accounting Standard 14, the method used for amalgamation was
Purchase Method. As a result, Goodwill to tune of Rs. 47,076,131 has been generated and the same is been amortised over a
period of five years.
The amalgamation is in accordance with the scheme of amalgamation sanctioned by the Honorable High Court of Bombay
on 15th July, 2005 pursuant to sections 391 to 394 and the provisions of the Companies Act, 1956. The current year’s figures
include the figures of the amalgamated entity hence the same are not comparable with the corresponding figures for the
previous year.
4. Principles of Consolidation
The Financial Statements of the parent company and its subsidiaries have been consolidated on a line by line basis by adding
together the book values of like items of assets, liabilities, incomes and expenses after eliminating intra-group transactions
and unrealised profits and losses resulting therefrom.
The financial statements of Antah Kale Sdn. Bhd., which is jointly controlled with Syarikat Pesaka Antah Sdn. Bhd. in Malaysia
has been accounted for as per the proportionate consolidation method as prescribed by AS-27 on “Financial Reporting of
Interest in Joint Ventures” issued by The Institute of Chartered Accountants of India. Kale Consultants Limited has 60% stake
in the joint venture.
5. The details of related party transactions are as under :
Particulars Key
Management Personnel
Remuneration paid to Managing Director Rs. 4,940,740
Debit Balance oustanding :
Remuneration Nil
Key Management Personnel : Narendra Kale (Chairman)
Vipul Jain (Managing Director)

Schedules
6. Fixed Assets and Depreciation

Fixed Assets are stated at acquisition cost less accumulated depreciation. Depreciation is provided by the Parent Company
on Written Down Value Method in accordance with the Companies Act, 1956. Depreciation has been provided by the charge
on methods and at the rates required/ permissible by the local laws so as to write off the assets over their useful life.
7. Goodwill
The excess of cost to the Parent Company of its investment in the subsidiary over its share of equity, on the acquisition date,
is recognized in the financial statements as Goodwill.
8. Foreign Currency Transactions

The financial statements of the wholly owned foreign subsidiaries and the jointly controlled entity have been translated from
the financial currency of the wholly owned foreign subsidiaries to reporting currency of the parent as per AS – 11 on “Accounting
for the Effects of changes in Foreign Exchange Rates” issued by The Institute of Chartered Accountants of India.
In translating the financial statements of the subsidiaries and the jointly controlled entity, for incorporation in financial
statements, all assets and liabilities, except fixed assets which are stated at historical cost, are translated at the closing rate;
income and expense items are translated at average rates for the year and all resulting exchange differences are accumulated
in a foreign exchange reserve until the disposal of the net investment.
9. Disclosures
The notes to the consolidated financial statements are intended to serve as a means of informative disclosure and a guide to
better understanding of the financial information about the economic activities and the economic resources controlled as a
single economic entity. Recognizing this purpose the Company has disclosed only such notes from the individual financial
statements, which fairly present the needed disclosures. Practical consideration and lack of uniformity on account of local
laws and practices made it desirable to exclude notes to accounts and accounting policies, which, in the opinion of the
management, could be better viewed when referred to the individual financial statements.
10. Consolidated Segment Report
Primary Segments-Business Segments

1. Segment Revenue
Travel and Transportation 700,398,303 603,926,982
Projects and Services 40,723,230 37,888,531
Total 741,121,533 641,815,513
Less: Inter segmental revenue 7,383,375 10,277,668
Net Revenue from operations 733,738,158 631,537,845
2. Segment Results Profit/(loss) before tax and interest
Projects and Services 5,811,592 (2,514,131)
Total 64,777,789 34,611,192
Less: Interest 10,002,205 8,789,031
Less: Other un-allocable expenditure net of unallocable income 18,526,605 13,469,551
Total Profit Before Tax 73,302,189 39,291,712
3. Capital employed
Projects and Services 20,268,063 14,842,524
Total 712,392,249 651,803,951

Schedules
Secondary Segments : Geographical Segment by Location of Customers

Segment Revenue from External Customers For the year ended For the year ended
Europe 217,278,975 90,093,170
USA and South America 70,215,950 73,293,310
Middle East and Africa 235,026,602 225,142,863
Asia Pacific 61,095,478 74,028,369
India 150,121,153 168,980,133
Total 733,738,158 631,537,845
Notes :
1. The Consolidated Segment Report is prepared in accordance with the Accounting Standard 17 “Segment Reporting”
issued by The Institute of Chartered Accountants of India.
2. The Company’s operations relate to the provision of Information Technology solutions in two areas viz the Travel and
Transportation industry and the generic Projects and Services business. Accordingly, the revenues from these industry
classes comprises the primary basis of Segmental information set out above and secondary Segment reporting is based
upon the geographical location of Customers.
3. The Accounting policies consistently used in the preparation of the consolidated financial statements are also applied to
record revenue and expenditure in individual segments.
4. There is no change in the basis of pricing of inter segment transfers and accounting policies adopted for segment reporting.
5. Previous year figures have been regrouped and rearranged wherever necessary.
Place : Mumbai


Consolidated Cash Flow Statement 31st March, 2006 31st March, 2005
CASH FLOWS FROM OPERATING ACTIVITIES

Net Profit before Tax ............................................................................................ 73,302,190 39,268,046
Adjustments to Reconcile Profit after Tax to Cash Provided by ..
Operating Activities
Add: Depreciation and Amortisation ............................................................. 93,155,928 79,390,517
Interest Paid ............................................................................................................. 10,002,205 8,789,031
Loss on Sale of Fixed Assets ............................................................................... 506,600 1,709,661
Prior Period Expenses/Gain ............................................................................... 1,154,463 (7,238,947)
Less: Transfer to Minority Interest .................................................................... (382,589) (27,989)
Other Income .......................................................................................................... (18,525,378) (1,526,523)
Effect of foreign Currency Translation ........................................................... (2,867,162) 968,722
Adjustment for Extraordinary Items ..............................................
Items Relating to Discontinued BusInesses ................................................ – (19,344,906)
Changes in Current Assets and Liabilities
(Increase) / Decrease in Inventory .................................................................. – 489,320
(Increase) / Decrease in Sundry Debtors ...................................................... 77,393,780 (134,568,229)
(Increase) / Decrease in Loans and Advances ............................................ (2,168,351) (3,184,112)
(Increase) / Decrease in Other Current Assets ........................................... (23,840,796) (12,755,159)
Increase / (Decrease) in Current Liabilities and Provisions .................. (49,876,505) 100,340,903
Increase / (Decrease) in Miscellaneous Expenses .................................... – 23,666
Cash Generated from Operations ................................................... 157,854,385 52,334,001
Current Taxes and Fringe Benefit Tax ............................................................. (7,513,468) (166,267)
Net Cash Generated by Operating Activities (A) .......................... 150,340,917 52,167,734
Increase / (Decrease) in Deferred Tax Liability (B) ........................ (47,370) 26,267
Cash Flows from Financing Activities .............................................
Proceeds from issue of Share Capital ............................................................ 41,080,016 3,037,524
Increase / (Decrease) in Secured Loans ........................................................ (45,639,217) 15,932,233
Increase / (Decrease) in Unsecured Loans ................................................... – 1,000,000
Net Cash Generated by Financing Activities (C) ........................... (4,559,201) 19,969,757
Cash Flows from Investing Activities
(Increase) / Decrease in Goodwill .................................................................... 37,151,261 5,905,081
Purchase / Sale of Fixed Assets ......................................................................... (145,985,472) (101,690,166)
(Purchase) / Sale of Investment ........................................................................ 9,075,000 2,921,402
Impact of Amalgamation .................................................................................... 12,106,039 –
Proposed Dividend including Dividend Tax ............................................... (18,308,126) –
Other Income Received ....................................................................................... 18,525,378 1,526,523
Interest Paid ............................................................................................................. (10,002,205) (8,789,031)
Increase / (Decrease) in Minority Interest .................................................... 382,589 (1,890,842)
Net Cash Generated by Investing Activities (D) ............................ (97,055,536) (102,017,033)
Net Cash (A)+(B)+(C)+(D) ................................................................. 48,678,810 (29,853,275)
Cash and Cash Equivalents at the Beginning of the Year ...................... 43,807,399 73,660,674
Cash and Cash Equivalents at the End of the Year ................................... 92,486,209 43,807,399
Net Increase/(Decrease) in Cash and Cash Equivalents ............... 48,678,810 (29,853,275)
Notes
1. Cash and Cash Equivalents include Rs 411,581 of Kale eTravel Technologies Ltd. taken over on amalgamation by Kale Consultants Limited
2. The amalgamation of erstwhile Kale eTravel Technologies Limited with Kale Consultants Limited is a non cash transaction wherein assets and
liabilites were acquired on amalgamation against investment at cost of Rs. 49,914,545.
3. Purchase of Fixed Assets includes Rs. 47,076,131 as Goodwill raised on amalgamation.
4. Previous years figures are not comparable due to note No. 2 above
Place : Mumbai

Statement of Subsidiaries
Statement pursuant to Section 212 of the Companies Act, 1956
Sr. Particulars Kale Softech Inc. Kale Consultants Antah Kale Synetairos Kale
No. Australia Pty. Sdn. Bhd. Technologies Technologies
Limited Limited Limited
(USA) (Australia) (Malaysia) (India) (UK)
1 Financial Year Ended 31st March, 2006 31st March, 2006 31st March, 2006 31st March, 2006 31st March, 2006
2 Shares of Subsidiary
held as on 31st March,
2006
a. Number of Shares and 1,300,000 Class A 967,151 Ordinary 600,000 76,548 shares 1 Share of GBP
face value voting common Shares of AUD Ordinary of Rs. 10 each 1 fully paid
stock of USD 0.01 1 each Shares of fully paid up
each and 450,000 RM 1 each
5% Redeemable
Preferred stock of
USD 1 each
b. Extent of Holding 100% 100% 60% 89.23% 100%
3 Net aggregate amount

of profit / (loss) of the
subsidiary so far as it
concerns the members
of Kale Consultants Limited
for the current financial
year
a. Dealt with in the

accounts of Kale
Consultants Limited Nil Nil Nil Nil Nil
b. Not dealt with in the

accounts of Kale
Consultants Limited USD (122,055) AUD 10,073 RM 2,465 Rs. 3,552,357 GBP 29,228
4 Net aggregate amount

of profit / (loss) of the
subsidiary so far as it
concerns the members
of Kale Consultants Limited
for the previous
financial year
a. Dealt with in the

accounts of Kale
Consultants Limited Nil Nil Nil NA NA
b. Not dealt with in the

accounts of Kale
Consultants Limited USD (251,318) AUD (30,918) RM (4,065) Rs. 259,878 GBP 43,782
Place: Mumbai Ninad Umranikar Narendra Kale Vipul Jain Prabhakar Deodhar Pravin Gandhi
Date : 25th April, 2006 Company Secretary Chairman Managing Director Director Director

Financial Statements of Subsidiaries
Kale Softech, Inc.
Kale Technologies Ltd.
Synetairos Technologies Ltd.

Kale Softech, Inc.
Directors’ Report
To,
The Shareholders,
The Board of Directors of Kale Softech, Inc. (“the Company”) presents its report in respect of the period from 1st April, 2005 to 31st
March, 2006.
Directors
The names of the directors in office during or till the end of the financial year are:
Names Position
Narendra Kale Chairman
Ashish Malhotra Director
Vipul Jain Director
Ashish Nanda Director
All the directors held their position as a director as of the date of this report.
Principal Activity
The principal activity of the Company during the financial year was marketing software solutions and outsourced services to the
travel and transportation industry. No significant change in the nature of business activities occurred during the year.
Results
The turnover of the Company during the year was USD 1,926,347 as compared to USD 1,947,774 in the previous year. The Company
made a Net Loss of USD 121,636 for the year as compared to Profit of USD 69,092 during the previous year.
Dividends
The Directors recommend that no dividend be paid or declared, in view of the accumulated losses.
Review of Operations
The Company’s focus is on the Travel and Transportation business in line with the Parent Company’s growth strategy. During this
year, Kale’s NFP service continued to be quite steady and further helped strengthening its position in the industry.
APEX™ has continued to be the growth driver for the Company. Since, IATA approved Kale’s APEX™, as an industry standard for
Neutral Fare Proration (NFP) – (one among only two to be so approved along with CIPS by ATPCO), the Company has commenced
providing services to the airlines.
The Directors are pleased to announce that the number of airlines that have signed up for APEX™ has increased to nine. This
includes three of the top ten airlines of the world and Air France and Air Canada amongst others.
Last year Continental Airlines signed up for the use of APEX™ as a single proration engine for all domestic and international
requirements as well as outsourced their image based data processing service and Error Queue processing through the Parent
Company’s outsourcing division; Kale MPS™ (Managed Process Service). This process is in operation and is running successfully.
During the year IATA has chosen Kale as one of the “Simplify the Business” (StB) partners to facilitate airlines in meeting StB goals.
Kale is proud to announce that it is the only Indian Company to be selected for this coveted partnership and this will position
Kale as a key facilitator for the airlines, in their efforts to implement the StB projects initiated by IATA.
With NFP service, Kale has also managed to capitalize on its superior product development and deployment expertise to gain
repeat as well as corollary business from its clients.
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Company during the financial year other than those disclosed in
this report.
Significant Event after Balance Sheet Date
There are no significant events to report since the book-close and Balance Sheet date of 31st March, 2006.

Kale Softech, Inc.
Directors’ Report
Likely Developments and Future Results

The Company will continue to focus on pursuing opportunities in the Travel and Transportation industry for software solutions
and outsourced services in the local markets.
There is an increasing awareness among airlines and they appreciate the superior functionality of APEX™. A few airlines are
undergoing trials on APEX™ and we are expecting more and more carriers to select APEX™ as the NFP engine.
Kale Softech, Inc., has obtained membership of the IATA Clearing House (ICH) which is a positive move for smoother and faster
invoice settlement for all customers. This will enable the Company to improve its collection cycle.
The pipeline for NFP, Revenue Accounting and Cargo Solutions is very strong and the future will see the Company having a
stronger customer base. The Company also feels that there is a great potential in the eTravel industry. The US has developed as
the largest online travel market in the world. This presents a great opportunity for the Company and we intend to capitalize on
this.
The future is full of challenges and our aim is to consolidate our position in the Travel and Transportation industry. The Company
is confident of improving its financial performance in the years to come.
Environmental Regulation Performance
The Company’s operations are not subjected to any particular and significant environmental regulation under a law of the US
Federal or any State Government. Accordingly, no environmental disclosure is required.
Directors’ Interests
Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit,
other than benefits disclosed in the financial statements as emoluments or the fixed salary of a full-time employee of the Company
or a related body corporate, by reason of a contract made by the Company or a related body corporate with the Director or with
a firm of which the Director is a member, or with a company in which the Director has a substantial interest.
Indemnification of Officers
The Company has not, during or since the end of the financial year, in respect of any person who is or has been an officer or
auditor of the Company:
• Indemnified or made any relevant agreement for indemnifying against a liability, including costs and expenses in successfully
defending legal proceedings; or
• Paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal
proceedings.
• In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper
explanation relating to material departures.
• the directors had 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 or loss of the company for that period.
• The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting
• The directors had prepared the annual accounts on a going concern basis.
• This report has been made in accordance with a resolution of directors.
Place : New Jersey Narendra Kale Ashish Malhotra

Date : 21st April, 2006 Chairman Director & CEO

Kale Softech, Inc.
As at As at As at As at
Balance Sheet 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
Schedule (Amount in USD) (Amount in Rs.) (Amount in USD) (Amount in Rs.)
SOURCES OF FUNDS
Share Capital ........................................................................................... 1 463,000 22,013,808 463,000 22,013,808
Reserves and Surplus .......................................................................... 2 1,287,000 57,400,942 1,287,000 57,400,942
TOTAL ........................................................................................................ 1,750,000 79,414,750 1,750,000 79,414,750
Fixed Assets 3
Gross Block ............................................................................................ 134,857 5,716,614 124,255 5,227,976
Less : Accumulated Depreciation .................................................. 116,731 4,957,354 103,267 4,349,036
Net Block .................................................................................................. 18,126 759,260 20,988 878,940

A. Current Assets
Sundry Debtors ............................................................................. 4 420,332 18,721,567 628,865 27,431,113
Cash and Bank Balances ............................................................ 5 281,853 12,553,742 399,165 17,411,564
Other Current Assets .................................................................... 6 – – 105,944 4,621,265
B. Loans and Advances ................................................................... 7 20,240 901,465 14,877 648,927
TOTAL ........................................................................................................ 722,425 32,176,774 1,148,851 50,112,869
Less : Current Liabilities and Provisions

A) Current Liabilities ......................................................................... 8 386,993 17,236,717 694,399 30,289,683
B) Provisions ......................................................................................... 9 550 24,497 377 16,445
Net Current Assets ............................................................................. 334,882 14,915,560 454,075 19,806,741
Profit and Loss Account ...................................................................... 1,396,992 63,739,930 1,274,937 58,729,069
TOTAL ........................................................................................................ 1,750,000 79,414,750 1,750,000 79,414,750
Significant Accounting Policies and Notes to Accounts ....... 12
The Schedules referred to above and the notes thereon form an integral part of the Balance Sheet


Kale Softech, Inc.

Profit & Loss Account 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
Schedule (Amount in USD) (Amount in Rs.) (Amount in USD) (Amount in Rs.)
Income
Software Development Services and Products ........................ 1,915,479 84,663,366 1,946,051 87,304,312
Other Income ......................................................................................... 10,868 480,349 1,723 77,275
TOTAL ........................................................................................................ 1,926,347 85,143,715 1,947,774 87,381,587
Expenses
Software Development, Delivery and Support Expenses .... 10 1,070,537 47,317,295 1,028,074 46,121,742
Administration, Selling and Other Expenses ............................. 11 956,980 42,298,103 821,346 36,847,425
Total Operating Expenses .............................................................. 2,027,517 89,615,398 1,849,420 82,969,167
Operating Profit/(Loss) (PBIDT) .................................................. (101,170) (4,471,683) 98,354 4,412,420
Depreciation and Amortisation ...................................................... 19,918 879,386 28,560 1,281,267

Financial Expenses ................................................................................ 548 24,232 702 31,515
Profit/(Loss) Before Tax and Extraordinary Loss ................. (121,636) (5,375,298) 69,092 3,099,638
Extraordinary Gain/(Loss) .................................................................. – – (309,360) (13,878,599)
Profit/(Loss) Before Tax and after Extraordinary Loss (PBT) (121,636) (5,375,298) (240,268) (10,778,961 )
Provision for Taxes ................................................................................ 550 24,310 – –
Profit/(Loss) After Tax (PAT) .......................................................... (122,186) (5,399,608) (240,268) (10,778,961 )
Prior Period Item ................................................................................... 131 5,839 (11,050) (495,716)
Profit/(Loss) After Tax and Extraordinary Item .................. (122,055) (5,393,768) (251,318) (11,274,677)
Balance brought forward from Previous Year ........................... (1,274,937) (58,319,702) (1,023,619) (47,045,025)
Net Income transferred to Balance Sheet .............................. (1,396,992) (63,713,471) (1,274,937) (58,319,702)
The Schedules referred to above and the notes thereon form an integral part of the Profit and Loss Account


Kale Softech, Inc.
Schedules 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
(Amount in USD) (Amount in Rs.) (Amount in USD) (Amount in Rs.)
SCHEDULE 1: SHARE CAPITAL

Authorised
25,000,000 Class A voting stock of USD 0.01 each
10,000,000 Class B non-voting stock of USD 0.01 each ... 350,000 350,000
500,000 Preferred stock of USD 1 each ................................... 500,000 500,000
Issued, Subscribed and Paid Up
1,300,000 Class A voting stock of USD of 0.01 each .......... 13,000 579,808 13,000 579,808
(Previous Year 1,300,000 Class A voting stock of USD of 0.01 each)
450,000 Preferred Stock of USD 1 each .................................. 450,000 21,434,000 450,000 21,434,000
(Previous Year 450,000 Preferred Stock of USD 1 each)
TOTAL ......................................................................... 463,000 22,013,808 463,000 22,013,808
SCHEDULE 2: RESERVES and SURPLUS
Share premium
Opening Balance ............................................................................. 1,287,000 57,400,942 1,287,000 57,400,942
Add: Received during the year .................................................. – – – –
TOTAL ......................................................................... 1,287,000 57,400,942 1,287,000 57,400,942
SCHEDULE 4: SUNDRY DEBTORS (Unsecured)
Debtors .......................................................................................... 420,332 18,721,567 628,865 27,431,113
TOTAL ......................................................................... 420,332 18,721,567 628,865 27,431,113
SCHEDULE 5: CASH AND BANK BALANCES
Balance with Bank ...........................................................................
First Union CAP Account .............................................................. 281,853 12,553,742 399,165 17,411,564
TOTAL ......................................................................... 281,853 12,553,742 399,165 17,411,564
SCHEDULE 6: OTHER CURRENT ASSETS
Income Accrued but not due ...................................................... – – 105,944 4,621,265
TOTAL ......................................................................... – – 105,944 4,621,265
SCHEDULE 7: LOANS AND ADVANCES
(Unsecured, Considered Good)
Prepaid Taxes ..................................................................................... 7,100 316,243 – –
Other Current Assets - (Prepaid Expenses) .......................... 1,852 82,477 5,877 256,347
Advances - Real estate .................................................................. 11,288 502,745 9,000 392,580
TOTAL ......................................................................... 20,240 901,465 14,877 648,927
SCHEDULE 8: CURRENT LIABILITIES
Sundry Creditors .............................................................................. 118,029 5,257,047 434,260 18,942,423
Advances from Clients ................................................................... 160,000 7,126,400 160,000 6,979,200
Other Liabilities ................................................................................ 27,998 1,247,029 19,411 846,692
Income Received in Advance ...................................................... 80,966 3,606,241 80,728 3,521,368
TOTAL ......................................................................... 386,993 17,236,717 694,399 30,289,683
SCHEDULE 9: PROVISIONS
Provision for Taxation-State Tax ................................................ 550 24,497 377 16,445
TOTAL ......................................................................... 550 24,497 377 16,445

Kale Softech, Inc.
72
SCHEDULE 3 : FIXED ASSETS
Particulars As at Additions Deletions As at Upto 31st During the On Upto 31st As at 31st As at 31st
1st April, 2005 during the during the 31st March, March, 2005 year Deletions March, 2006 March, 2006 March, 2005
year year 2006
Computer Hardware (USD) 30,136 12,525 – 42,661 22,269 6,363 – 28,632 14,029 7,867
(INR) 1,274,978 557,879 – 1,832,857 937,970 306,425 – 1,244,395 588,462 337,008
Software (USD) 2,627 – – 2,627 2,627 – – 2,627 – –
(INR) 110,334 – – 110,334 110,334 – – 110,334 – –
Equipment (USD) 23,129 3,885 – 27,014 19,658 3,856 – 23,514 3,500 3,471
(INR) 971,418 173,044 – 1,144,462 828,298 170,435 – 998,733 145,729 143,120
Leasehold Improvement (USD) 4,351 – 4,351 – 3,553 798 4,351 – – 798
(INR) 182,742 – 182,742 – 149,646 33,096 182,742 – – 33,096
Furniture and Fixture (USD) 64,012 646 2,103 62,555 55,160 8,901 2,103 61,958 597 8,852
(INR) 2,688,504 28,783 88,326 2,628,961 2,322,788 369,430 88,326 2,603,892 25,069 365,716
TOTAL (USD) 124,255 17,056 6,454 134,857 103,267 19,918 6,454 116,731 18,126 20,988
TOTAL (INR) 5,227,976 759,706 271,068 5,716,614 4,349,036 879,386 271,068 4,957,354 759,260 878,940

Kale Softech, Inc.

(Amount in USD) (Amount in Rs.) (Amount in USD) (Amount in Rs.)
SCHEDULE 10 : SOFTWARE DEVELOPMENT,

DELIVERY AND SUPPORT EXPENSES
Cost of Third Party Products ........................................................ – – 79,128 3,549,868
COGS- Kale India Services ............................................................ 1,070,537 47,317,295 948,946 42,571,874
TOTAL ................................................................................ 1,070,537 47,317,295 1,028,074 46,121,742
SCHEDULE 11 : ADMINISTRATION, SELLING AND

OTHER EXPENSES
Salaries and Allowances ................................................................ 721,908 31,908,024 541,545 24,294,931
Traveling Expenses .......................................................................... 66,554 2,941,667 97,548 4,376,205
Entertainment Expenses ............................................................... 4,448 196,583 5,979 268,225
Postage and Courier Charges ..................................................... 1,671 73,841 18,422 826,433
Communication ................................................................................ 19,219 849,483 – –
Repairs and Maintenance ............................................................. 389 17,180 1,392 62,452
Office Supplies .................................................................................. 10,642 470,353 1,737 77,946
Books and Subscription ................................................................ 14,583 644,544 – –
Office Expenses ................................................................................ 7,581 335,061 2,841 127,433
Rent ....................................................................................................... 55,651 2,459,767 58,767 2,636,435
Sales Promotion and Advertisement ....................................... 2,135 94,366 21,564 967,425
Rates and Taxes ................................................................................. 774 34,203 4,540 203,660
Conferences and Seminars .......................................................... 21,113 933,186 – –
Legal and Professional Charges ................................................. 18,801 831,035 8,413 377,422
Power, Fuel and Water Charges .................................................. 2,432 107,506 4,459 200,049
Audit Charges .................................................................................... 4,500 198,898 4,500 201,880
Provision for Doubtful Debts ...................................................... – – 39,245 1,760,630
Insurance .......................................................................................... 2,078 91,847 2,194 98,428
Recruitment ....................................................................................... – – 8,200 367,871
Bad Debts Written Off ................................................................... 2,501 110,559 – –
TOTAL ......................................................................... 956,980 42,298,103 821,346 36,847,425

Kale Softech, Inc.
Schedules
1. Significant Accounting Policies
a) Organization and Operations

Kale Softech, Inc., was incorporated on November 16, 1998 in the State of New Jersey. The primary business activity
during the financial year was marketing software solutions and outsourced services to travel and transportation industry.
The Company began its operations on January 1, 1999.
b) Basis of Accounting
Assets, liabilities, revenue and expenses are recognized on accrual basis of accounting for both financial statements and
federal income tax purposes. The accounts are prepared on a going concern basis.
2. Cash at Bank
Balance in the bank as at March 31, 2006 was USD 281,853. The bank balance exceeds the federally insured limit of USD
100,000.
3. Property and Equipment

Equipment and Furniture and Fixture are carried at cost. Depreciation is computed primarily using straight line method over
their useful lives. Total depreciation for period April 1, 2005 to March 31, 2006 is USD 19,918.
Fixed Assets consists of the following as at March 31, 2006

Particulars Amount in USD
Computer Hardware 42,661
Equipment 27,014
Furniture and Fixtures 62,555
Software 2,627
Total Assets 134,857
Less: Accumulated Depreciation 116,731
Net Property and Equipment 18,126
During the year Furniture and Fixture and Leasehold Improvements originally costing USD 6,454, written down value USD Nil,
were sold at a gain of USD 1,000.
4. Accounts Receivable
Management believes that USD 420,332, Accounts Receivable, as on March 31, 2006, is fully collectible. Geographical
concentration of sales is:
68% USA
5% Canada
5% Brazil
22% India
5. Income Taxes
The Company has a net operating loss carry forwards approximating USD 1,396,992, which are available to offset future
Federal and State taxable income.

Kale Softech, Inc.
Schedules
6. Operating Lease
The Company has an agreement to rent the office space. The lease agreement is for five years expiring on September 15,
2010. The annual base rent over the five years period is USD 45,150 per annum.
7. Other Assets
Security deposit USD 11,288, being three months rent has been given to the current land lord.
8. Bad Debts
The uncollected balance from Nexgen Information Systems for USD 2,501 was written off in the current year.
9. Advance Payments Received

Advance payments have been received as under:
USD 100,000 from Continental Airlines, Inc. for annual maintenance contract.
USD 60,000 from Delta Technology, LLC for software right to use.
These deposits are refundable deposits. As per the agreement the deposits would be adjusted against 50% of the monthly
transaction charges starting 13th month of operation, until the refundable deposit account is exhausted.
10. Post Balance Sheet Event

An Officer of the Company was asked to separate from the Company without cause, effective from April 1, 2006. According to
the terms of his employment agreement, the Company is required to pay him USD250,000 in twelve monthly payments
starting from April 30, 2006. During the period he will receive full benefits accrued to employees pursuant to Company
policy. In addition, he would also be entitled to 200,000 options, from Kale Consultants Limited ESOP scheme, to be exercised
before July 31, 2007.
11. Shareholders’ Equity

The total authorized share capital of the Company is 35,000,000 shares of Common Stock, par value USD 0.01 per share,
divided into 2 classes as under;
25,000,000 Class A voting shares of Common Stock

10,000,000 Class B non-voting shares of Common Stock
In addition to above, Company has an authorized capital of 500,000 preferred stock of USD 1 each.
1,300,000 Class A shares and 450,000 preferred stock of USD 0.01 per share have been issued to Kale Consultants Ltd. (a
Foreign Corporation), who owns 100% of the current issued share capital.


Directors’ Report
To,
The Members,
The Board of Directors of Kale Consultants Australia Pty Ltd (“the Company”) has pleasure in submitting its report in respect of the year
ended 31st March, 2006.
Directors
The names of the directors in office during or since the end of the financial year are:
Names Position
Ashley Goldsworthy Chairman
Vipul Jain Director
Narendra Kale Director
Sudhir Kale Director
Michael Lappen Director
Prakash Alkutkar Director
William Kingsley Director
Principal Activity
The principal activity of the Company during the financial year was marketing software services and products. No significant change in
the nature of this activity occurred during the year.
Results
The net profit of the Company for the financial year was AUD10,073 (2005 Loss AUD 30,918) after income tax expense of AUD Nil (2005
– Nil).
Dividends
The Directors recommend that no dividend be paid or declared.
Review of Operations
During the year, the Company achieved sales of AUD192,475 and reported a net profit after tax of AUD10,073.
Significant Changes in the State of Affairs

The Company has ceased its operations during the year.
Significant Event After Balance Sheet Date

No matters or circumstances have arisen since the end of the financial year, which significantly affected or may significantly affect the
operations of the Company, the results of those operations or the state of affairs of the Company in future financial years other than
those disclosed in this report or in the accounts.
Likely Developments and Future Results

The Company has ceased its operations during the year and is unlikely that the company will operate in the foreseeable future.
Environmental Regulation Performance

The Company’s operations are not subjected to any particular and significant environmental regulation under a law of the Commonwealth
or of a State or Territory. Accordingly, no environmental disclosure is required.
Directors’ Interests
Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit, other
than benefits disclosed in the financial statements as emoluments or the fixed salary of a full-time employee of the Company or a
related body corporate, by reason of a contract made by the Company or a related body corporate with the director or with a firm of
which the director is a member, or with a company in which the director has a substantial interest.

Directors’ Report
Indemnification of Officers and Auditors

The Company has not, during or since the end of the financial year, in respect of any person who is or has been an officer or auditor of
the Company:
• indemnified or made any relevant agreement for indemnifying against a liability, including costs and expenses in successfully
defending legal proceedings; or
• paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal
proceedings.
Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of
the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the
Corporations Act 2001.
This report has been made in accordance with a resolution of directors.
Place : Mumbai Narendra Kale Vipul Jain

Date : 25th April, 2006 Director Director

Auditors’ Report
To
The Members of Kale Consultants Australia Pty Ltd
Audit opinion
In our opinion, the financial report of Kale Consultants Australia Pty. Ltd. :
• gives a true and fair view, as required by the Corporations Act, 2001 in Australia, of the financial position of Kale Consultants Australia Pty
Ltd. as at 31st March, 2006 and of its performance for the year ended on that date in accordance with the accounting policies described
in Note 1 to the financial statements, and
• is presented in accordance with Accounting Standards and other mandatory financial reporting requirements in Australia to the extent
described in Note 1 to the financial statements, the Corporations Act, 2001 and the Corporations Regulations, 2001.
This opinion must be read in conjunction with the following explanation of the scope and summary of our role as auditor.
Scope and summary of our role
The financial report – responsibility and content
The financial report, being a special purpose financial report, comprises the statement of financial position, statement of financial performance,
statement of cash flows, accompanying notes to the financial statements, and the directors’ declaration for Kale Consultants Australia Pty Ltd
(the Company) for the year ended 31st March, 2006. It has been prepared for distribution to members for the purpose of fulfilling the directors’
financial reporting requirements under the Corporations Act, 2001.
The directors’ of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the
Corporations Act, 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed
to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.
The directors have determined that the accounting policies used and described in Note 1 to the financial statements, including the basis of
accounting, which forms part of the financial report, are appropriate to meet the requirements of the Corporations Act, 2001 and the needs of the
members.
The auditor’s role and work
We conducted an independent audit of the financial report in order to express an opinion on it to the members of the Company. No opinion is
expressed as to whether the accounting policies used, and described in Note 1, are appropriate to the needs of the members. We disclaim any
assumption of responsibility for any reliance on this audit report or on the financial report to which it relates to any person other than the
members, or for any purpose other than that for which they were prepared.
Our audit was conducted in accordance with Australian Auditing Standards. The nature of an audit is influenced by factors such as the use of
professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive
evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.
In conducting the audit, we carried out a number of procedures to assess whether in all material respects the financial report presents fairly a
view in accordance with the Corporations Act, 2001, the accounting policies described in Note 1 to the financial statements, and the Corporations
Regulations, 2001, which is consistent with our understanding of the Company’s financial position, and its performance as represented by the
results of its operations and cash flows. These policies do not require the application of all Accounting Standards and other mandatory profes-
sional reporting requirements in Australia.
We formed our audit opinion on the basis of these procedures, which included:
• selecting and examining evidence, on a test basis, to support amounts and disclosures in the financial report. This included testing, as
required by auditing standards, certain internal controls, transactions and individual items. We did not examine every item of available
evidence
• evaluating significant accounting estimates made by the directors in their preparation of the financial report
• obtaining written confirmation regarding material representations made to us in connection with the audit.
When this audit report is included in a document containing the directors’ report, our procedures include reading the directors’ report to deter-
mine whether it contains any material inconsistencies with the financial report.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of
our procedures, our audit was not designed to provide assurance on internal controls.
Our audit did not involve an analysis of the prudence of business decisions made by the directors or management.
Independence
As auditor, we are required to be independent of the Company and free of interests which could be incompatible with integrity and objectivity.
In respect of this engagement, we followed the independence requirements set out by CPA Australia, the Corporations Act 2001 and the Auditing
and Assurance Standards Board.
In addition to our statutory audit work, we were engaged to undertake other services for the Company. In our opinion the provision of these
services has not impaired our independence.
Lal Pardasani & Associates Pty Ltd

Place : Melbourne, Victoria Certified Practising Accountants

Schedule (Amount in AUD) (Amount in Rs.) (Amount in AUD) (Amount in Rs.)
SOURCES OF FUNDS
Share Capital ........................................................................................... 1 967,151 25,188,405 967,151 25,188,405
TOTAL ........................................................................................................ 967,151 25,188,405 967,151 25,188,405
Fixed Assets ......................................................................... 2

Gross Block ............................................................................................ – – 2,656 71,712
Less : Accumulated Depreciation .................................................. – – 2,232 60,264
Net Block .................................................................................................. – – 424 11,448
Current Assets, Loans & Advances

Current Assets
Sundry Debtors ...................................................................................... 3 – – 28,034 945,046
Cash and Bank Balances ..................................................................... 4 24,520 782,204 83,616 2,818,680
Other Current Assets ........................................................................... 5 – – 1,400 47,194
TOTAL ........................................................................................................ 24,520 782,204 113,050 3,810,920
Less : Current Liabilities and Provisions

A) Current Liabilities ......................................................................... 6 – – 71,491 2,409,981
B) Provisions ......................................................................................... 7 – – 27,536 928,223
Net Current Assets ............................................................................. 24,520 782,204 14,023 472,716
Profit & Loss Account ........................................................................... 942,631 24,406,201 952,704 24,704,241

TOTAL ........................................................................................................ 967,151 25,188,405 967,151 25,188,405
The Schedules referred to above and the notes thereon form an integral part of the Balance Sheet



Profit & Loss Account 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
Schedule (Amount in AUD) (Amount in Rs.) (Amount in AUD) (Amount in Rs.)
Income
Software Development Services and Products ........................ 190,804 6,344,554 388,264 12,898,139
Other Income ......................................................................................... 1,671 55,561 1,581 52,522
TOTAL ........................................................................................................ 192,475 6,400,115 389,845 12,950,661
Expenses
Software Development, Delivery and Support Expenses .... 8 152,836 5,082,044 295,766 9,825,352
Administration, Selling and Other Expenses ............................. 9 29,478 980,185 123,226 4,093,560
TOTAL ........................................................................................................ 182,314 6,062,229 418,992 13,918,912
Operating Profit/(Loss) (PBIDT) .................................................. 10,161 337,886 (29,147) (968,251)
Financial Expenses ................................................................................ 9 309 – –

Depreciation ........................................................................................... 79 2,138 1,771 47,817
TOTAL ..................................................................................................... 88 2,447 1,771 47,817
Profit/(Loss) Before Tax (PBT) ...................................................... 10,073 335,439 (30,918) (1,016,068)
Provision for Taxation .......................................................................... – – – –
Profit After Tax (PAT) ......................................................................... 10,073 335,439 (30,918) (1,016,068)
Balance brought forward from Previous Year ........................... (952,704) (22,015,106) (921,786) (20,999,038)
Net Income transferred to Balance Sheet .............................. (942,631) (21,679,667) (952,704) (22,015,106)
The Schedules referred to above and the notes thereon form an integral part of the Profit and Loss Account


(Amount in AUD) (Amount in Rs.) (Amount in AUD) (Amount in Rs.)

Authorised
1,000,000 Ordinary Shares of AUD 1 each ........................................... 1,000,000 1,000,000
967,151 Ordinary Shares of AUD 1 each ............................................... 967,151 25,188,405 967,151 25,188,405
TOTAL ................................................................................................................. 967,151 25,188,405 967,151 25,188,405
SCHEDULE 3 : SUNDRY DEBTORS

(Unsecured, Considered Good)
Debtors .............................................................................................................. – – 108,216 3,647,977
Less : Provision ................................................................................................ – – 80,182 2,702,931
TOTAL ................................................................................................................. – – 28,034 945,046

Balance with National Australia Bank .................................................... 24,520 782,204 83,616 2,818,680
TOTAL ................................................................................................................. 24,520 782,204 83,616 2,818,680

Salary Advance to Employees ................................................................... – – 1,400 47,194
TOTAL ................................................................................................................. – – 1,400 47,194
SCHEDULE 6 : CURRENT LIABILITIES

Sundry Creditors ............................................................................................ – – 572 19,284
Kale Consultants Limited ............................................................................ – – 61,705 2,080,065
Accrued Expenses .......................................................................................... – – 7,057 237,902
Indirect Taxes Payable .................................................................................. – – 2,157 72,730
TOTAL ................................................................................................................. – – 71,491 2,409,981
SCHEDULE 7 : PROVISIONS
Provision for Annual Leave and Superannuation ............................. – – 27,536 928,223
TOTAL ................................................................................................................. – – 27,536 928,223

82
Schedules
Gross Block Depreciation Net Block
Particulars As at 1st Additions Deletions As at 31st Upto 31st For the On Deletions As at 31st As at 31st As at 31st
April, 2005 during the during the March, 2006 March, 2005 year March, 2006 March, 2006 March, 2005
year year
Plant and Equipment (AUD) 2,656 – 2,656 – 2,232 79 2,311 – – 424

(INR) 71,712 – 71,712 – 60,264 2,138 62,402 – – 11,448
TOTAL (AUD) 2,656 – 2,656 – 2,232 79 2,311 – – 424
TOTAL (INR) 71,712 – 71,712 – 60,264 2,138 62,402 – – 11,448


(Amount in AUD) (Amount in Rs.) (Amount in AUD) (Amount in Rs.)
SCHEDULE 8 : SOFTWARE DEVELOPMENT, DELIVERY AND

SUPPORT EXPENSES
Salaries and Allowances .............................................................................. 151,105 5,024,485 280,915 9,332,010
Travelling Expenses ....................................................................................... 1,731 57,559 14,146 469,925
Management Fees ......................................................................................... – – 705 23,417
TOTAL ................................................................................................................. 152,836 5,082,044 295,766 9,825,352

Salaries and Allowances ............................................................................... – – 52,696 1,750,564
Travelling Expenses ........................................................................................ – – 3,676 122,124
Printing and Stationery ................................................................................ 5 168 148 4,898
Postage, Telephone and Courier Charges .............................................. 886 29,452 9,011 299,358
Repairs and Maintenance ............................................................................ 335 11,155 1,108 36,797
Office Expenses ............................................................................................... – – 120 3,986
Rent ...................................................................................................................... – – 18,313 608,367
Legal and Professional Charges ................................................................. 20,979 697,570 25,462 845,848
Membership and Subscription .................................................................. – – 59 1,963
Insurance ........................................................................................................... – – 2,352 78,126
Audit Fees ..................................................................................................... 5,000 166,258 5,000 166,100
Bank Charges .................................................................................................... 1,928 64,094 1,846 61,318
Loss on Sale of Assets .................................................................................... 345 11,488 3,435 114,111
TOTAL ................................................................................................................. 29,478 980,185 123,226 4,093,560

Schedules
(a) Basis of Accounting
In the directors’ opinion, the Company is not a reporting entity because there are no users dependent on general-purpose financial
reports.
This is a special purpose financial report that has been prepared for the sole purpose of complying with the Corporations Act 2001
requirements to prepare and distribute a financial report to the members and must not be used for any other purpose. The directors
have determined that the accounting policies adopted are appropriate to meet the needs of the members.
The Company has applied Accounting Standard AASB 1025 Application of the Reporting Entity Concept and Other Amendments,
which amended the application clauses of all standards existing at the date of its issue so that they now apply only to companies
that qualify as reporting entities. However, the financial report has been prepared in accordance with AASB 1018 Statement of
Financial Performance, AASB 1034 Financial Report Presentation and Disclosures, AASB 1040 Statement of Financial Position and
other applicable Accounting Standards and Urgent issues Group Consensus Views with the exception of the disclosure requirements
in the following:
AASB 1004 – Revenue
AASB 1005 – Financial Reporting by Segments
AASB 1017 – Related Party Disclosures
AASB 1026 – Statement of Cash Flows – the disclosures required under paragraphs 11.1 and 12.2 only
AASB 1033 – Presentation and Disclosure of Financial Instruments (the classification standards in AASB 1033 have been
complied with)
The financial report is prepared in accordance with the historical cost convention. Unless otherwise stated, the accounting policies
adopted are consistent with those of the previous year. Comparative information is reclassified where appropriate to enhance
comparability.
(b) Foreign Currency Transactions
Foreign currency transactions are translated into Australian currency at the rates of exchange ruling at the dates of the transactions.
Amounts payable in foreign currencies at balance sheet date are translated at the rates of exchange ruling on that date.
Exchange differences relating to amounts payable in foreign currencies are brought to account as exchange gains or losses in the profit
and loss account in the financial year in which the exchange rates change.
(c) Income Tax
The Company adopts the liability method of tax-effect accounting whereby the income tax expense shown in the Statement of Financial
Performance is based on the operating profit before income tax adjusted for any permanent differences.
Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the
determination of operating profit before income tax and taxable income are brought to account either as provision for deferred income
tax or an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be
received or the liability will become payable.
Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future
income tax benefits in relation to the tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.
(d) Recoverable Amounts of Non-Current Assets
All non-current assets are reviewed at least annually to determine whether their carrying amounts require write down to recoverable
amount. Recoverable amount is determined using net cash flows that have not been discounted to present values.
(e) Plant and Equipment
Plant and equipment are carried at acquisition cost.
Plant and equipment are depreciated over their useful economic lives from original cost as follows:
Particulars Life Method

Plant and equipment 2.5-13.3 years Diminishing Value
Software 2.5 years Prime Cost

Schedules
(f) Financial Instruments included in Equity
Ordinary share capital is recorded at the value of the consideration received. Ordinary share capital bears no special terms or
conditions affecting income or capital entitlements of the shareholders.
Bank deposits are carried at cost and interest revenue is recognised on an effective yield basis.
(g) Operations Ceased
The Company ceased its operations during the year and the Directors believe it is unlikely that the company will operate in the
foreseeable future.
(h) Holding and Ultimate Controlling Entities
As at 31st March, 2006, the holding and ultimate controlling Company was Kale Consultants Limited, a company incorporated in
India.
(i) Economic Dependency
Kale Consultants Australia Pty. Ltd. is dependent upon its holding and ultimate controlling company for provision of services and
products and for financial support.
(j) Segment Information
The Company operates predominantly in one industry, marketing software services and products. All operations are carried out in
Australia.


Directors’ Report
To,
The Members,
The directors have pleasure in submitting their report and the financial statements of the Company for the year ended 31st March,
2006.
PRINCIPAL ACTIVITIES
The principal activities of the Company consist of providing consultancy services in computer systems development, software
and e-commerce. However, the Company remained dormant with effect from 1st July, 2005.
RESULTS Amount in RM
Profit for the year after taxation 22,299

Accumulated losses brought forward (466,071)
Accumulated losses carried forward (443,772)
RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year.
BAD AND DOUBTFUL DEBTS
(a) Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain that action
had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts, and that all known
bad debts had been written off and adequate provision had been made for doubtful debts.
(b) At the date of this report, the directors of the Company are not aware of any circumstances that would render the amount
written off for bad debts, or the amount of the provision for doubtful debts, in the Company inadequate to any substantial
extent.
CURRENT ASSETS
(a) Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain whether
any current assets, other than debts, were unlikely to realise in the ordinary course of business their value as shown in the
accounting records of the Company and to the extent so ascertained, were written down to an amount they might be
expected to realise.
(b) At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the
current assets in the financial statements of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the
existing method of valuation of assets or liabilities in the financial statements of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
(a) At the date of this report, there does not exist:
(i) any charge on the assets of the Company that has arisen since the end of the financial year and which secures the
liabilities of any person, or
(ii) any contingent liability in respect of the Company that has arisen since the end of the financial year.
(b) No contingent liability or other liability of the Company has become enforceable or is likely to become enforceable within
the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially
affect the ability of the Company to meet its obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial
statements of the Company, that would render any amount stated in the financial statements misleading.

Directors’ Report
ITEMS OF AN UNUSUAL NATURE

(a) The results of the operations of the Company for the financial year were not, in the opinion of the directors, substantially
affected by any item, transaction or event of a material and unusual nature.
(b) There has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or
event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations
of the Company for the current financial year.
DIRECTORS OF THE COMPANY
(a) Directors who served since the date of the last report are :-
Mr. Narayanan Anthony
Mr. Vipul Jain
Mr. Narendra Kale
Ms. Neela Bhattacherjee
Mr. Y.A.M. Tunku Dato’ Seri Nadzaruddin ibni Tuanku Ja’afar (resigned on 7th July, 2005)
Mr. Prakash Alkutkar (resigned on 7th July, 2005)
(b) According to the Register of Directors’ Shareholdings, none of the directors holding office at the end of the financial year
have any interest in the shares in the Company.
(c) In accordance with the Company’s Articles of Association, Mr. Vipul Jain retires from the Board at the forthcoming Annual
General Meeting and, being eligible, offers himself for re-election.
DIRECTORS’ BENEFITS
(a) Since the end of the previous financial year, no director of the Company has received or become entitled to receive any
benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which the
director is a member, or with a company in which the director has a substantial financial interest.
(b) Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable
the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
ULTIMATE HOLDING COMPANY
The directors regard Kale Consultants Ltd., a company incorporated in India, as the holding and ultimate holding company
of the Company.
STATEMENT BY DIRECTORS
In the opinion of the directors, the financial statements are drawn up in accordance with applicable approved accounting
standards so as to give a true and fair view of the state of affairs of the Company as at 31 March 2006 and of its results and
the cash flow for the year then ended.
AUDITORS
The auditors, Messrs. Ahmad Abdullah & Goh, Chartered Accountants, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors.
Vipul Jain Neela Bhattacherjee

Place : Mumbai Director Director

Auditors’ Report
To,
THE MEMBERS OF ANTAH KALE SDN. BHD.
We have audited the financial statements, the preparation of which is the responsibility of the Company’s directors.
It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion to
you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility
towards any other person for the contents of this report.
We have conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we
plan and perform the audit to obtain all the information and explanations which we considered necessary to provide us with
sufficient evidence to give reasonable assurance that the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes
an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the adequacy
of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable
approved accounting standards so as to give a true and fair view of:
(i) the state of affairs of the Company at 31st March, 2006 and of its results and the cash flow for the year ended on that
date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial statements.
(b) the accounting and other records and registers required by the Act to be kept by the Company have been properly kept
in accordance with the provisions of the Act.
AHMAD ABDULLAH & GOH AF-0381 GOH KENG JUAY 461/05/07(J)

Chartered Accountants CA(M), FCA(E&W)
An Independent Member of Partner
BAKER TILLY INTERNATIONAL
Kuala Lumpur, 24th April, 2006

Schedule (Amount in RM) (Amount in Rs.) (Amount in RM) (Amount in Rs.)
SOURCES OF FUNDS
Share Capital ........................................................................................... 1 1,000,000 12,080,500 1,000,000 12,080,500
TOTAL ........................................................................................................ 1,000,000 12,080,500 1,000,000 12,080,500
Fixed Assets ......................................................................... 2

Gross Block ............................................................................................ – – 213,084 2,599,624
Less : Accumulated Depreciation ................................................... – – 175,298 2,138,636
Net Block .................................................................................................. – – 37,786 460,988

Current Assets
Sundry Debtors ............................................................................. 3 188,310 2,279,402 2,032,373 23,331,642
Cash and Bank Balances ............................................................ 4 444,785 5,383,901 506,900 5,819,212
Other Current Assets ................................................................... 5 36,561 442,543 11,078 127,170
TOTAL ........................................................................................................ 669,656 8,105,846 2,550,351 29,278,024
Less : Current Liabilities and Provisions 6

A) Current Liabilities ......................................................................... 110,254 1,334,573 2,051,034 23,545,865
B) Provisions ......................................................................................... 3,174 38,414 3,174 36,432
Profit & Loss Account ........................................................................... 443,772 5,347,641 466,071 5,923,785
TOTAL ........................................................................................................ 1,000,000 12,080,500 1,000,000 12,080,500
Place : Mumbai Vipul Jain Neela Bhattacherjee



Profit and Loss Account 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
(Amount in RM) (Amount in Rs.) (Amount in RM) (Amount in Rs.)
Income
Net Sales ................................................................................................... 297,029 3,411,188 2,853,739 33,674,120

Other Income ......................................................................................... 89,329 1,025,887 – –
TOTAL ........................................................................................................ 386,358 4,437,075 2,853,739 33,674,120
Expenditure
Software Development, Delivery and Support Expenses .... 7 251,358 2,886,689 2,474,139 29,194,840
Administration, Selling and Other Expenses ............................. 8 100,036 1,148,850 362,346 4,275,680
Total Operating Expenses .............................................................. 351,394 4,035,539 2,836,485 33,470,520
Operating Profit/(Loss) (PBIDT) ................................................. 34,964 401,536 17,254 203,600
Depreciation and Amortization ...................................................... 12,665 145,459 42,221 515,096

Profit/(Loss) Before Taxes (PBT) .................................................. 22,299 256,077 (24,967) (311,496)
Provision for Taxes – – – –

Profit After Tax (PAT) ......................................................................... 22,299 256,077 (24,967) (311,496)
Balance brought forward from Previous Year ........................... (466,071) (5,674,453) (441,104) (5,362,957)
Net Income transferred to Balance Sheet .............................. (443,772) (5,418,376) (466,071) (5,674,453)
The Schedules referred to above and the notes thereon form an integral part of the Profit & Loss Account.



Authorised
1,000,000 Ordinary Shares of RM 1 each ................................................. 1,000,000 1,000,000
1,000,000 Ordinary Shares of RM 1 each ................................................. 1,000,000 12,080,500 1,000,000 12,080,500
TOTAL ..................................................................................................................... 1,000,000 12,080,500 1,000,000 12,080,500
Debtors ........................................................................................................ 188,310 2,279,402 2,032,373 23,331,642
TOTAL ........................................................................................................ 188,310 2,279,402 2,032,373 23,331,642
Cash Balances .................................................................................................... 3,500 42,366 – –
Bank Balances ................................................................................................... 441,285 5,341,535 506,900 5,819,212
TOTAL ................................................................................................................. 444,785 5,383,901 506,900 5,819,212
Deposits ................................................................................................................. 3,583 43,361 9,153 105,074
Prepaid Expenses .............................................................................................. 687 8,316 1,134 13,015
Prepaid Taxes ....................................................................................................... 791 9,575 791 9,081
Other Debtors ..................................................................................................... 31,500 381,291 – –
TOTAL .......................................................................................... 36,561 442,543 11,078 127,170
Due to Holding Company .............................................................................. 8,866 107,317 1,820,366 20,897,801
Liabilities for Expenses
Kale Consultants limited ........................................................................ – – 20,104 230,796
Syarikat Pesaka Antah ............................................................................ 18,670 225,994 33,662 386,439
Directors’ Fee .............................................................................................. 45,000 544,703 45,000 516,600
Statutory and other Liabilities ............................................................ 37,718 456,559 131,902 1,514,229
TOTAL .......................................................................................... 110,254 1,334,573 2,051,034 23,545,865
PROVISIONS ..................................................................................
Provision for Taxes ............................................................................................. 3,174 38,414 3,174 36,432
TOTAL .......................................................................................... 3,174 38,414 3,174 36,432


Cost of Services (Sales Audit and Cargo Audit) .................................... 251,358 2,886,689 2,360,731 27,856,626
Licence Fees ...................................................................................................... – – – 111,508 1,315,794
Hire of Equipment ............................................................................................. – – 1,900 22,420
TOTAL .......................................................................................... 251,358 2,886,689 2,474,139 29,194,840
Salary ................................................................................................................. 58,479 671,596 188,750 2,227,250
Postage, Telephone and Courier Charges ............................................... 162 1,856 26,628 314,210
Printing and Stationery ................................................................................... 9,651 110,835 6,798 80,216
Entertainment expenses ................................................................................ – – 1,163 13,723
Power, Fuel and Water charges .................................................................... 525 6,029 6,231 73,526
Exchange Loss ..................................................................................................... – – 3,338 39,388
Car Maintainance charges ............................................................................. 1,430 16,423 4,307 50,823
Rent ................................................................................................................. 2,788 32,018 1,764 20,815
Discount Allowed .............................................................................................. – – 67,268 793,762
Travelling Expenses .......................................................................................... 5,315 61,041 10,048 118,566
Insurance ............................................................................................................... 1,592 18,283 4,799 56,628
Legal and Professional Charges .................................................................. 1,570 18,030 7,900 93,220
Miscellaneous Expenses ................................................................................. 2,360 27,100 13,598 160,456
Office Expenses .................................................................................................. 5,380 61,789 4,364 51,495
Directors Fees ...................................................................................................... – – 10,000 118,000
Audit Fees ............................................................................................................. 4,500 51,680 5,000 59,000
Assets Written off ............................................................................................... 6,039 69,356 – –
Bank Charges ....................................................................................................... 245 2,814 390 4,602
TOTAL .......................................................................................... 100,036 1,148,850 362,346 4,275,680

92
Schedules
Particulars As at 1st Additions Deletions Cost as at 31st Upto 31st For the On Deletions As at 31st As at 31st As at 31st
April, 2005 during the during the March, 2006 March, 2005 year during March, 2006 March, 2006 March, 2005
year year the year
Office Equipment (RM) 19,545 – 19,545 – 7,746 1,158 8,904 – – 11,799

(INR) 238,449 – 238,449 – 94,501 13,301 107,802 – – 143,948
Furniture and Fixture (RM) 3,460 – 3,460 – 1,645 115 1,760 – – 1,815
(INR) 42,212 – 42,212 – 20,069 1,324 21,393 – – 22,143
Vehicles (RM) 147,962 – 147,962 – 137,949 9,864 147,813 – – 10,013
(INR) 1,805,136 – 1,805,136 – 1,682,978 113,283 1,796,261 – – 122,158
Computer (RM) 42,117 – 42,117 – 27,958 1,528 29,486 – – 14,159
(INR) 513,827 – 513,827 – 341,088 17,551 358,639 – – 172,739
TOTAL in RM 213,084 – 213,084 – 175,298 12,665 187,963 – – 37,786
TOTAL in INR 2,599,624 – 2,599,624 – 2,138,636 145,459 2,284,095 – – 460,988

Schedules
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
(a) The principal activities of the Company consist of providing consultancy services in computer systems development, software and e-
commerce.
(b) The Company is a private limited liability company, incorporated and domiciled in Malaysia.
(c) The registered office of the Company is located at No. 64, Persiaran 65C, Pekeliling Business Centre, 53000 Kuala Lumpur, Malaysia.
(d) The principal place of business of the Company is located at 3rd Floor, Wisma Antah, Jalan Changkat Semantan, Damansara Heights, 50490
Kuala Lumpur, Malaysia.
(e) The directors regard Kale Consultants Ltd., a company incorporated in India, as the holding and ultimate holding company of the Company.
(f ) The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 24th
April, 2006.
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in accordance with the provision of the Companies Act, 1965 and applicable
approved accounting standards.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Accounting Convention

The financial statements of the Company are prepared under the historical cost convention.
(b) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. The cost of fixed assets comprises their purchase cost and any incidental cost
of acquisition. Where an indication of impairment exists, the carrying amount of the assets is assessed and written down immediately to its
recoverable amount.
(c) Depreciation
Fixed assets are depreciated on the straight line basis at rates designed to write off the cost of the assets over the expected useful lives of
the assets concerned. The principal annual rate used for this purpose is 20%.
(d) Taxation
The tax expense in the income statement comprises current and deferred tax. Current tax is the expected amount of income taxes payable
in respect of taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax
credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax
losses and unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based
on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement,
except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited
directly in equity.
(e) Employee Benefits

Salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered
by employees of the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services
are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated
absences such as sick leave are recognised when the absences occur. As required by law, companies in Malaysia make contributions to the
state pension scheme, the Employees Provident Fund. Such contributions are recognised as an expense in the income statement as incurred.

Schedules
(f) Foreign Currency Transactions

Foreign currency transactions are converted into Malaysian Ringgit at the rates of exchange ruling on transaction dates. Foreign currency
assets and liabilities are translated into Malaysian Ringgit at the rates of exchange ruling at the balance sheet date. Exchange gains and
losses are dealt with in the income statement.
(g) Cash and Cash Equivalents

The Company adopts the indirect method in the preparation of the Cash Flow Statement. Cash and cash equivalents represent cash and
bank balances and deposits with a licensed bank.
(h) Income Recognition

Consultancy fee is recognised when services are rendered.
(i) Financial Instruments

Financial instruments carried in the balance sheet include debtors, cash and bank balances and creditors.
4. FIXED ASSETS
Details of fixed assets are as follows :-
Computers Motor Vehicles Furniture and Office Equipments Total
Fixtures
RM RM RM RM RM
Cost
Balance at 1.4.2005 42,117 147,962 3,460 19,545 213,084
Disposal (42,117) (147,962) (3,460) (19,545) (213,084)
Balance at 31.3.2006 – – – – –
Accumulated Depreciation
Balance at 1.4.2005 27,958 137,949 1,645 7,746 175,298
Charge for the year 1,528 9,864 115 1,158 12,665
Disposal (29,486) (147,813) (1,760) (8,904) (187,963)
Balance at 31.3.2006 – – – – –
Net Book Value

Balance at 31.3.2006 – – – – –
Balance at 31.3.2005 14,159 10,013 1,815 11,799 37,786
Depreciation for 2005 8,389 29,592 433 3,807 42,221
5. TRADE DEBTORS
The normal credit term granted by the Company ranges from 14 days to 60 days. The Company has no significant concentration of credit
risk that may arise from exposure to a single debtor or to groups of debtors.
6. SUNDRY CREDITORS AND ACCRUALS

Included in the above item are the following :-
(a) an amount of RM Nil (2005 : RM20,104) being expenses incurred on behalf of the Company by the holding company, Kale Consultants Ltd.
(b) an amount of RM18,670 (2005 : RM33,662) being balance of the Company’s share of administrative expenses payable to the investing
company, Syarikat Pesaka Antah Sdn. Bhd.
7. DUE TO HOLDING COMPANY

The holding company is Kale Consultants Ltd., a company incorporated in India. The amount due has arisen in the normal course of business.
8. SHARE CAPITAL
2006 2005
RM RM
Ordinary shares of RM1.00 each :
Authorised 1,000,000 1,000,000
Issued and fully paid 1,000,000 1,000,000

Schedules
9. OPERATING REVENUE
Operating revenue represents the invoiced value of consultancy services rendered.
10. PROFIT/(LOSS) BEFORE TAXATION

This is stated :-
2006 2005
RM RM
After charging :
Audit fee 4,500 5,000
Depreciation 12,665 42,221
Director’s fee – 10,000
Rent 2,788 1,764
Hire of equipment – 1,900
Professional fees paid to holding company 251,358 2,360,731
Fixed assets written off 6,039 –
and crediting :
Gain on sale of fixed assets 84,618 –
Realised gain on foreign exchange 4,711 –
11. TAXATION
2006 2005
RM RM
Taxation for the year – –
A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income tax expense
at the effective income tax rate is as follows:-
2006 2005
RM RM
Profit/(Loss) before taxation 22,299 (24,967)
Taxation at the Malaysian statutory rate of 20% (4,460) 4,993
Tax effects arising from :-
Non-deductible expenses (3,005) (9,801)
Capital allowances utilised for the year – 4,541
Tax losses utilised for the year 7,465 267
Tax expense for the year – –
12. DEFERRED TAXATION

Details of deferred taxation calculated under the liability method are set out below :-
2006 2005
RM RM
Temporary difference between depreciation – 16,599
and corresponding taxation allowances
Unutilised tax losses (352,348) (389,672)
Total difference (352,348) (373,073)
Deferred tax assets not recognised
in the financial statements at 20% (70,470) (74,615)

Schedules
The unutilised tax losses are available indefinitely for offset against future taxable profits. Deferred taxation assets have not been recognised
in respect of this item as it is not probable that future taxable profits will be available against which the Company can utilise the benefits.
13. EMPLOYEES INFORMATION

2006 2005
RM RM
Staff costs 58,479 188,750
The Company had no employees at the end of the financial year (2005 : 2 employees).
14. FINANCIAL INSTRUMENTS

The carrying amounts of the financial assets and liabilities of the Company at the year end approximated their fair values.
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s financial risk management policies seek to ensure that adequate financial resources are available for the development of
the Company’s business whilst managing its risks.
(a) Credit risk

Credit risk arises when sales are made on deferred credit terms. All accounts are reviewed on a regular basis and appropriate recovery
action taken on overdue amounts.
(b) Liquidity risk

The Company ensures that there are adequate funds to meet all its obligations in a timely and cost effective manner.


Kale Technologies Limited
Directors’ Report
The Directors present their Report and the audited Financial Statements of the Company for the year ended 31st March, 2006.
Financial Results
(Amount in GBP)
Particulars 2005-06 2004-05
Total Revenue .......................................................................................... 1,250,062 770,613
Total Expenditure .................................................................................... 1,212,176 715,130
Operating Profit/(Loss) ........................................................................... 37,886 55,483
Finance Charges .............................................................................................................. 436 400
Depreciation ..................................................................................................................... 502 501
Profit/ (Loss) Before Tax .......................................................................... 36,948 54,582
Provision for Tax .............................................................................................................. 7,720 10,800
Profit/ (Loss) After Tax ............................................................................. 29,228 43,782
Profit / (Loss) brought forward from earlier year ................................................ 109,502 65,720
Profit/ (Loss) carried to Balance Sheet .................................................. 138,730 109,502
Operations
The Company has recorded Sales of GBP 1,250,062 and Profit After Tax is GBP 29,228 in comparison to previous year Sales of GBP
770,613 and Profit After Tax is GBP 43,782.
Directors
Mr. Rajnish Kapur is the sole Director of the Company.
Statement of Director’s Responsibilities

Company Law requires the Directors to prepare the financial statement for each financial year, which give a true and fair view of the
state of affairs of the Company for that period and for the Profit and Loss of the Company for that period. The Directors are required
to prepare the financial statements on going concern basis, unless it is appropriate to presume that the Company will continue in
business.
The Directors confirm that suitable accounting policies have been used and applied consistently. They also confirm that reasonable
& prudent judgment and estimates have been made in preparing the financial statement for the year ended March 31, 2006 and
the applicable accounting standard have been followed.
The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act,
1985. They are also responsible for safe guarding the assets of the Company and hence for taking reasonable steps for the preven-
tion and detection of fraud and other irregularities.
Auditors
The Auditors PSJ Alexander & Co, will be proposed for re-appointment in accordance with Section 385 of Companies Act 1985. The
report has been prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies.
Place : Mumbai Rajnish Kapur

Date : 24th April, 2006 Director

Auditors’ Report
To,
The Members of
We have audited the financial statements of Kale Technologies Limited for the year ended 31st March 2006. These financial
statements have been prepared under the accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of director and auditors

As described, the Company’s director is responsible for the preparation of financial statements in accordance with applicable law
and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies Act, 1985. We also report to you if, in our opinion, the Report of the Director is consistent with the
financial statements, if the Company has not kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding director’s remuneration and other transactions
is not disclosed.
We read the Report of the Director and consider the implications for our report if we become aware of any apparent misstatements
within it.
Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgements made by the director in the preparation
of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material
misstatements, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements:
• give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the
Company’s affairs as at 31st March, 2006 and of its profit for the year then ended; and
• have been properly prepared in accordance with the Companies Act, 1985.
PSJ Alexander & Co

Chartered Accountants & Registered Auditors
1 Doughty Street
London
WC1N 2PH
Date: 24th April, 2006

Schedule (Amount in GBP) (Amount in Rs.) (Amount in GBP) (Amount in Rs.)
SOURCES OF FUNDS
Share Capital ........................................................................................... 1 1 74 1 74
Reserve and Surplus ............................................................................ 2 138,730 10,748,577 109,502 8,992,776
TOTAL ........................................................................................................ 138,731 10,748,651 109,503 8,992,850
Fixed Assets ......................................................................... 3

Gross Block ............................................................................................ 3,239 260,020 3,239 260,020
Less : Accumulated Depreciation ................................................... 1,144 91,149 642 51,540
Net Block .................................................................................................. 2,095 168,871 2,597 208,480

Sundry Debtors ...................................................................................... 4 193,852 15,009,946 227,091 18,660,064
Cash and Bank Balances ..................................................................... 5 49,388 3,824,139 17,592 1,445,509
Loans and Advances, Other Current Assets ................................ 6 148,827 11,523,645 3,501 287,639
TOTAL ........................................................................................................ 392,067 30,357,730 248,184 20,393,212

Current Liabilities .................................................................................. 247,998 19,202,418 130,478 10,721,406
Provisions ................................................................................................. 7,433 575,532 10,800 887,436
TOTAL ........................................................................................................ 138,731 10,748,651 109,503 8,992,850



Profit and Loss Account 31st March, 2006 31st March, 2006 31st March, 2005 31st March, 2005
Schedule (Amount in GBP) (Amount in Rs.) (Amount in GBP) (Amount in Rs.)
Income
Software Services .................................................................................. 1,247,029 98,297,072 769,673 63,804,635

Other Income ......................................................................................... 8 3,033 239,042 940 77,944
TOTAL ........................................................................................................ 1,250,062 98,536,114 770,613 63,882,579
Expenditure
Software Development, Delivery and Support Expenses ....... 9 1,028,109 81,040,740 663,520 55,004,760
Administration, Selling and Other Expenses ............................... 10 184,067 14,508,943 51,610 4,278,364
Finance Charges ..................................................................................... 11 436 34,363 400 31,156
Depreciation ............................................................................................ 502 39,609 501 40,233
TOTAL ............................................................................................ 1,213,114 95,623,655 716,031 59,354,513
Profit / ( Loss) for the year Before Tax ................................ 36,948 2,912,459 54,582 4,528,066
Provision for Tax

- Current Tax .................................................................................. 7,720 608,529 10,800 887,436
Profit / (Loss) After Taxation ............................................... 29,228 2,303,930 43,782 3,640,630
Add:Profit/(Loss) brought forward from previous year ........... 109,502 8,726,575 65,720 5,085,945
Carried forward Profit taken to the Balance Sheet .......... 138,730 11,030,505 109,502 8,726,575
Basic and diluted earnings /(loss) per share ................................ 29,228 2,303,930 43,782 3,640,630
The Schedules referred to above and the notes thereon form an integral part of the Profit & Loss Account.


(Amount in GBP) (Amount in Rs.) (Amount in GBP) (Amount in Rs.)

Authorised Capital
100,000 Equity Shares of Pound 1/- each .............................................. 100,000 100,000
Issued, Subscribed and Paid up
1 Equity Share of GBP 1 each fully paid up ............................................ 1 74 1 74
(Previous Year 1 Equity Share of GBP 1 each fully paid up)
Share held by the Holding Company Kale Consultants Limited
(Previous Year share held by Holding Company
Kale eTravel Technologies Limited) .........................................................
1 74 1 74

Cumulative Transalation Adjustment Account .................................... – (281,928) – 266,201
Balance in Profit & Loss Account ............................................................... 138,730 11,030,505 109,502 8,726,575
TOTAL ................................................................................................................. 138,730 10,748,577 109,502 8,992,776

Gross Block ........................................................................................................ 3,239 260,020 3,239 260,020
Less : Accumulated Depreciation .............................................................. 1,144 91,149 642 51,540
Net Block .......................................................................................................... 2,095 168,871 2,597 208,480

Considered Good ............................................................................................ 193,852 15,009,946 227,091 18,660,064
TOTAL ................................................................................................................. 193,852 15,009,946 227,091 18,660,064

Balances with Non Scheduled Banks
- Hongkong and Shanghai Banking Corporation (HSBC),
Coventry,U.K. ........................................................................................ 49,388 3,824,139 17,592 1,445,509
TOTAL ................................................................................................................. 49,388 3,824,139 17,592 1,445,509
SCHEDULE 6 : LOANS AND ADVANCES, OTHER CURRENT ASSETS

(Unsecured, Considered good)
Income Acrued but not due ....................................................................... 146,066 11,309,890 – –
Other Debtors .................................................................................................. 1,700 131,631 3,501 287,639
Prepayments and Accrued Income .......................................................... 1,061 82,124 – –
TOTAL ................................................................................................................. 148,827 11,523,645 3,501 287,639

Current Liabilities
Sundry Creditors ............................................................................................. 3,739 289,481 34,376 2,824,716
Other Liabilities
Amounts due to Parent Company ................................................... 101,745 7,878,115 86,430 7,101,953
VAT Liabillity ............................................................................................. 36,916 2,858,369 9,672 794,737
Accruals and Deferred income .................................................................. 105,598 8,176,453 – –
TOTAL ................................................................................................................. 247,998 19,202,418 130,478 10,721,406
Provisions
Provision for Taxation .................................................................................... 7,433 575,532 10,800 887,436
TOTAL ................................................................................................................. 7,433 575,532 10,800 887,436


Bank Interest ..................................................................................................... 1,935 152,487 940 77,944
Miscellaneous Income .................................................................................. 1,098 86,555 – –
TOTAL ................................................................................................................. 3,033 239,042 940 77,944
SCHEDULE 9 : SOFTWARE DEVELOPMENT,

DELIVERY AND SUPPORT EXPENSES
Project Cost/Technology Sale .................................................................... 901,731 71,078,982 601,094 49,829,747
Software Consultancy Charges ................................................................. – – 35,600 2,951,142
Work Permit Charges ..................................................................................... 4,944 389,729 11,971 992,416
Techinal Staff Salary and Allowances ...................................................... 121,434 9,572,029 14,855 1,231,455
TOTAL ................................................................................................................. 1,028,109 81,040,740 663,520 55,004,760
SCHEDULE 10 : ADMINISTRATION AND OTHER EXPENSES

Rent ...................................................................................................................... 14,926 1,176,505 4,410 365,582
Travel and Conveyance ................................................................................. 3,372 265,769 18,037 1,495,244
Business Promotion ....................................................................................... – – 14,481 1,200,417
Books and Periodicals ................................................................................... 85 6,678 – –
Repair and Maintenance - Others ............................................................. – – 94 7,792
Communication .............................................................................................. 828 65,284 1,420 117,703
Rates and Taxes ............................................................................................... – – 15 1,243
Legal and Professional Charges ................................................................. 153,940 12,134,305 4,934 409,031
Insurance ........................................................................................................... 4,187 330,022 6,379 528,797
Miscellaneous Expenses ............................................................................... 3,729 293,905 340 28,207
Audit Fees .......................................................................................................... 3,000 236,475 1,500 124,348
TOTAL ................................................................................................................. 184,067 14,508,943 51,610 4,278,364
SCHEDULE 11 : FINANCE CHARGES

Bank Charges .................................................................................................... 436 34,363 400 31,156
TOTAL ................................................................................................................. 436 34,363 400 31,156

Schedules

1. ACCOUNTING POLICIES
Accounting convention
The financial statements have been prepared under the historical cost convention and are in accordance with applicable accounting standards.
Turnover
Turnover represents net sales of services, excluding value added tax.
Tangible Fixed Assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Plant and Machinery - 20% on reducing balance
Foreign currencies
Assets and Liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in
foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into
account in arriving at the operating result.
Hire purchase and leasing commitments
Rentals paid under operating leases are charged to the profit and loss account as incurred.
(Amount in GBP)
2006 2005
2. STAFF COSTS
Wages and salaries 121,434 14,855
The average monthly number of employees during the year was as follows:
Director and Company Secretary 2 2
Project staff 6 2
8 4
3. OPERATING PROFIT
The operating profit is stated after charging:
Other operating leases 14,926 4,410
Depreciation - owned assets 502 501
Auditors remuneration 3,000 1,500
Director’s emoluments – –
4. TAXATION
Analysis of the tax charge
The tax charge on the profit on ordinary activities for the year was as follows:
Current tax:
UK corporation tax 7,720 10,800
Tax on profit on ordinary activities 7,720 10,800
5. TANGIBLE FIXED ASSETS

Plant and Machinery
COST
At 1st April, 2005 and 31st March, 2006 3,239
DEPRECIATION
At 1st April, 2005 642
Charge for year 502
At 31st March, 2006 1,144
NET BOOK VALUE
At 31st March, 2006 2,095
At 31st March, 2005 2,597
6. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade debtors 193,852 227,091
Amounts recoverable on contract 146,066 –
Other debtors 1,700 2,200
Prepayments and accrued income 1,061 1,301
342,679 230,592

Schedules
(Amount in GBP)
2006 2005
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors 3,739 34,376

Taxation 7,433 10,800
VAT 36,916 9,672
Amounts due to parent company 101,745 86,430
Accruals and deferred income 105,598 –
255,431 141,278
8. OPERATING LEASE COMMITMENTS

The following operating lease payments are committed to be paid within one year:
Land and buildings
Expiring:
Within one year 14,926 4,410
9. CALLED UP SHARE CAPITAL

Authorised:
Number Class Nominal
value
100,000 Ordinary shares 1 100,000 100,000
Allotted, issued and fully paid:

Number Class Nominal
value
1 Ordinary shares 1 1 1
10. RESERVES
Profit and Loss Account
At 1st April, 2005 109,502

Retained profit for the year 29,228
At 31st March, 2006 138,730
11. ULTIMATE PARENT COMPANY
The immediate and ultimate parent undertaking is Kale Consultants Limited, a company incorporated in India.
12. RELATED PARTY DISCLOSURES
The Company became a member of Kale Consultants Limited group on 1st April, 2005. Services received from group companies during the
year amounted to £806,521 and the balance at the year end was £101,745 payable.
13. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Profit for the financial year 29,228 43,782
New share issued during the year – –
Net addition to shareholders’ funds 29,228 43,782
Opening shareholders’ funds 109,503 65,721
Closing shareholders’ funds 138,731 109,503
Equity interests 138,731 109,503


Synetairos Technologies Limited
Directors’ Report
To,
The Members,
Your Directors present the Second Report on the Business and Operations of your Company for the year ended 31st March , 2006.
Financial Results
(Rupees in Million)
Particulars 2005– 2006 2004– 2005
Total Revenue
- Domestic 34.38 24.99
- Other Income 0.10 0.06
Total 34.48 25.05
Total Expenditure 26.38 22.24
Operating Profit 8.09 2.81
Depreciation 0.04 –
Amortisation of Commercial Rights 2.40 2.40
Profit Before Tax 5.65 0.41
Provision for Tax 2.00 0.13
Provision for Fringe Benefit tax 0.15 –
Deferred Tax (0.05) 0.02
Profit/(Loss) for the Year After Tax 3.55 0.26
Profit brought forward from previous year 0.26 –
Profit available for appropriation 3.81 0.26
Appropriations:
- Transferred to/(from) General Reserves – –
- Balance Transferred to Balance Sheet 3.81 0.26
Overview
Your Company has shown remarkable improvement over the previous year, both in terms of revenues and profitability. As India
continues to claim larger share of global software development activity, the Company is confident of continuing this growth in
the years to come.
Operations
In the second year of its operations, your Company recorded total revenues of Rs. 34.38 million against Rs. 24.99 million during
the previous year, an increase of 37.57%. The operating expenses during the year rose by 18.62% from Rs. 22.24 million in the
previous year to Rs. 26.38 million. Operating profits stood at Rs. 8.09 million as against Rs. 2.81 million during the previous year, a
growth of 187.90% over the previous year. Net profit after tax increased by 1265.38% to Rs. 3.55 million from Rs. 0.26 million in
the previous year.
Directors
Mr. Sumeet Nadkar – Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for
reappointment.
Auditors
M/s. D. G. Kurundwadkar, Chartered Accountant, Auditor of the Company, retires at the ensuing Annual General Meeting and
being eligible, offer themselves for reappointment.

Directors’ Report

• in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper expla-
nation relating to material departures.
• the directors had 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 or loss of the Company for that period.
• the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting
• the directors had prepared the annual accounts on a going concern basis.
Dividend
In view of your Company’s efforts towards achieving future development, expansion initiatives and building reserves, your direc-
tors do not recommend any dividend this year.
Fixed Deposits
During the year your Company has not accepted any fixed deposits from the public.
Particulars of Employees
As required under the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 as amended, the name and other particulars of employee are set out in the annexure, which forms part of this report.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars prescribed under clause (e) of subsection (1) of section 217 of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the annexure which forms part of this
report.
Acknowledgement
Your directors extend their gratitude to all clients, vendors, banks, financial institutions, regulatory and governmental authorities
for their continued support during the year.
The directors place on record their appreciation of contribution made by the employees at all levels for their dedicated and
committed efforts during the year.
Place : Mumbai Prakash Alkutkar Vipul Jain

Date : 25th April, 2006 Managing Director Director

Conservation of Energy
The range of activities of your Company require minimal energy consumption and every endeavour has been made
to ensure optimal utilization of energy and avoid wastage through automation and deployment of energy-efficient
equipments.
Your Company takes adequate measures to reduce energy consumption by using efficient computer terminals and
by using latest technology. The impact of these efforts has enhanced energy efficiency. As energy cost forms a very
small part of total expenses, the financial impact of these measures is not material and measured.
Technology Absorption
Your Company, in its endeavour to obtain and deliver the best, adopts the best technology in the field, upgrades itself
continuously.
Research and Development (R&D)
Your Company has a Research and Development team carrying on research and development activities.
Foreign exchange earning and outgo
Your Company had no transactions involving any foreign exchange earnings and outgo during the year.
Place : Mumbai Prakash Alkutkar Vipul Jain

Date : 25th April, 2006 Managing Director Director
STATEMENT AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES
(PARTICULARS OF EMPLOYEES) RULES, 1975
Name Designation Qualification Age Date of Experience Gross Last
(Years) commencement (Years) Remuneration Employment
of employment (Rs.)
1 Prakash Alkutkar Managing Director M. Sc. 52 01/01/2005 27 2,435,811 Kale Consultants Ltd.

Auditors’ Report
To,
The Members,
Synetairos Technologies Limited,
Pune.
1. I have audited the attached Balance Sheet of Synetairos Technologies Limited, as at 31st March, 2006 and the Profit and Loss
Account for the year ended on that date, annexed thereto and the Cash Flow Statement for the period ended on that date.
These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion
on these financial statements based on my audit.
2. I have conducted my audit in accordance with auditing standards generally accepted in India. Those Standards require that
I 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 the
management as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 including amendments thereto issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, I enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said order.
4. Further to my comments in the annexure referred above I report that :

a) I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for
the purpose of my audit.
b) In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my
examination of the books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with
the books of account.
d) In my opinion, the Profit and Loss Account, the Balance Sheet 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 Companies Act, 1956, to the extent
applicable.
e) On the basis of written representations received from the directors of the Company as at 31st March, 2006 and taken
on record by the Board of Directors, I report that no director is disqualified from being appointed as director of the
Company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
f) In my opinion, and to the best of my information and according to the explanations given to me, the said Balance Sheet
and Profit and Loss Account read together with notes give the information required by the Companies Act, 1956, in the
manner so required and give a true and fair view :-
i) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2006 ;
ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date ; and
iii) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Place : Mumbai D.G. Kurundwadkar

Date : 25th April, 2006 Proprietor

(Referred to in paragraph 3 of my Report of even date)
1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of
fixed assets.
(b) The fixed assets have been physically verified by the management at reasonable intervals. As informed to me, no
material discrepancies were noticed on such verification during the period.
(c) The Company has not disposed of any substantial part of fixed assets during the period.
2. The Company does not have inventory and consumables and spare parts for computers, hence the clauses (a), (b) and (c)
are not applicable
3. As informed to me, the Company has neither granted nor taken any loans secured or unsecured, to or from companies, firm
or other parties covered in the register maintained under section 301 of the Companies Act, 1956, except from the Director
of the Company.
4. In my opinion and according to the information and explanations given to me, there is an adequate internal control system
commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed
assets and with regard to the sale of software services.
5. According to the information and explanations provided by the management there were no contracts or arrangements
referred to in Section 301 of the Act. However, during the year there were transactions in the nature of services rendered /
received, claims for expenses and invoices raised by the holding company on behalf of the Company.
6. The Company has not accepted any deposits from the public during the period.
7. The clause relating to internal audit system is not applicable to the Company.
8. As informed to me, the Central Government has not prescribed maintenance of cost records u/s 209 (1) (d) of the Companies
Act, 1956 for the Company.
9. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident
fund, investor education & protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax,
custom duty, excise duty, cess and other material statutory dues, as applicable to the Company.
(b) According to the information and explanations given to me, no undisputed amounts payable in respect of income tax,
wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2006 for a period
of more than six months from the date they became payable.
(c) According to the information and explanations given to me, there are no dues of income tax, customs duty, wealth tax,
service tax, sales tax, excise duty and cess which have not been deposited on account of any dispute.
10. The Company has been registered and is in existence for a period of less than five years, and hence the clause does not
apply to the Company. Further, the Company had not incurred any cash loss during the financial year.
11. Based on the audit procedures and on the information and explanations given by the management, the Company has not
availed any loans from financial institutions or bank during the period. Further the Company does not have any borrowings
by way of debentures.
12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other
securities.

13. In my opinion and according to the information and explanations given to me, the nature of activities of the Company does
not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.
14. The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions
of clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.
15. According to the information and explanations given to me, the Company has not given guarantees for loans taken by
others from banks or financial institutions.
16. The Company has not taken any term loans during the period.
17. According to the information and explanations given to me and on an overall examination of the books and records of the
Company, I report that no funds raised on short-term basis have been used for long-term investment.
18. The Company has not made preferential allotment to parties and companies covered in the register maintained under
19. The Company has not issued any debentures.
20. The Company has not raised any money through a public issue during the period.
21. Based upon the audit procedures performed and information and explanations given by the management, I report that no
fraud on or by the Company has been noticed or reported during the course of my audit.

Place : Mumbai D.G. Kurundwadkar

Date : 25th April, 2006. Proprietor

As at As at
Balance Sheet 31st March, 2006 31st March, 2005
SOURCES OF FUNDS
Share Capital ............................................................................................................. 1 857,880 857,880
Reserves and Surplus ............................................................................................ 2 15,546,451 11,994,094
16,404,331 12,851,974
Loan Funds
Unsecured Loans ..................................................................................................... 3 1,000,000 1,302,584
Deferred Tax Liability ............................................................................................. – 26,267
TOTAL ........................................................................................... 17,404,331 14,180,825
Fixed Assets ....................................................................................... 4
Gross Block ................................................................................................................ 12,178,621 12,069,580
Less : Accumulated Depreciation ..................................................................... 4,849,042 2,407,119
Net Block ................................................................................................................. 7,329,579 9,662,461
Deferred Tax Asset (Net) ...................................................................................... 21,103 –

A. Current Assets
Sundry Debtors .......................................................................................... 5 9,502,342 3,762,384
Cash and Bank Balances .......................................................................... 6 1,037,306 1,472,290
B. Loans and Advances ...................................................................................... 7 4,365,540 1,015,307
14,905,188 6,249,981

A. Current Liabilities ............................................................................................ 2,576,539 1,606,617
B. Provisions ........................................................................................................... 2,275,000 125,000
Net Current Assets .......................................................................................... 10,053,649 4,518,364
TOTAL ........................................................................................... 17,404,331 14,180,825
Significant Accounting Policies and Notes to Accounts ......................... 12
This is the Balance Sheet referred to in my report of even date.
D.G. Kurundwadkar Prakash Alkutkar Vipul Jain

Proprietor Managing Director Director
Place : Mumbai

For the Year ended For the Period ended

Profit and Loss Account 31st March, 2006 31st March, 2005
INCOME
Software Projects and Services ..................................................................... 34,378,676 24,990,392
Other Income ....................................................................................................... 9 102,539 66,399
TOTAL ............................................................................................... 34,481,215 25,056,791
EXPENDITURE
Software Development, Delivery and Support Expenses .................. 10 18,499,566 15,207,947
Administration, Selling and Other Expenses ........................................... 11 7,884,739 7,030,580
Total Operating Expenses ............................................................. 26,384,305 22,238,527
Operating Profit (PBIDT) ............................................................... 8,096,910 2,818,264
Depreciation ......................................................................................................... 41,923 7,119
Amortisation of Commercial Rights ............................................................ 2,400,000 2,400,000
Profit Before Tax (PBT) .................................................................. 5,654,987 411,145
Provision for Tax ................................................................................................... 2,000,000 125,000
Provision for Fringe Benefit Tax ..................................................................... 150,000 –
Deferred Tax .......................................................................................................... (47,370) 26,267
Profit After Tax (PAT) ...................................................................... 3,552,357 259,878
Profit brought forward from previous year .............................................. 259,878 –
Amount available for Appropriations .......................................... 3,812,235 259,878
Appropriations ...............................................................................
Transferred to/(from) General Reserve ...................................................... – –
Balance carried forward to Balance Sheet ................................................ 3,812,235 259,878
TOTAL ............................................................................................... 3,812,235 259,878
Earnings per Share (Equity shares, face value Rs. 10 each)

Basic (Not Annualised) ...................................................................................... 41.41 3.03
Number of shares used in computing earnings per share
Basic ................................................................................................................. 85,788 85,788
Significant Accounting Policies and Notes to Accounts ..................... 12
The Schedules referred to above and the notes thereon form an integral part of the Profit and Loss Account.
This is the Profit and Loss Account referred to in my report of even date.

Place : Mumbai

As At As At

Authorised
100,000 Equity Shares of Rs. 10 each ............................................................................. 1,000,000 1,000,000
85,788 Equity Shares of Rs. 10 each fully paid up ..................................................... 857,880 857,880
(of the above 26,548 equity shares of Rs. 10 each fully paid up allotted
towards consideration other than cash and pursuant to transfer of
some contracts by Kale Consultants Limited)
TOTAL ............................................................................................................. 857,880 857,880
Share Premium
Opening Balance .................................................................................................................... 11,734,216 –
Additions during the Period .............................................................................................. – 11,734,216
Closing Balance 11,734,216 11,734,216
Profit and Loss Account 3,812,235 259,878
TOTAL .............................................................................................................. 15,546,451 11,994,094
SCHEDULE 3 : UNSECURED LOANS
Loan From
Director ............................................................................................................................... 1,000,000 1,000,000
Kale Consultants Limited ............................................................................................ – 302,584
TOTAL .............................................................................................................. 1,000,000 1,302,584
Debts outstanding for a period exceeding six months
Considered Good ........................................................................................................ 76,478 –
Other Debts
Considered Good ........................................................................................................ 9,425,864 3,762,384
TOTAL .............................................................................................................. 9,502,342 3,762,384
Cash on hand ........................................................................................................................... 25,803 10,116
Balance with Scheduled Banks
in Current Accounts ....................................................................................................... 1,011,503 1,462,174
TOTAL .............................................................................................................. 1,037,306 1,472,290
SCHEDULE 7 : LOANS AND ADVANCES (Unsecured, considered good)
Advance Income Tax (including Tax Deducted at Source) ................................... 3,663,493 810,307
Other Current Assets 702,047 205,000
TOTAL .............................................................................................................. 4,365,540 1,015,307
A. Current Liabilities
Sundry Creditors
(i) Total outstanding dues of Small Scale Industrial Undertakings ......... – –
(ii) Total outstanding dues of creditors other than Small Scale ................ 30,136 69,155
Industrial Undertakings
Other Liabilities ....................................................................................................... 2,546,403 1,537,462
2,576,539 1,606,617

As At As At
B. Provisions
Provision for Taxation .................................................................................................... 2,275,000 125,000
TOTAL .............................................................................................................. 4,851,539 1,731,617
For the year ended For the period ended


Miscellaneous Income ......................................................................................................... 94,649 66,399
Bank Interest Received ........................................................................................................ 7,890 –
TOTAL .............................................................................................................. 102,539 66,399
SCHEDULE 10 : SOFTWARE DEVELOPMENT, DELIVERY AND

SUPPORT EXPENSES
Provident Fund & Gratuity ................................................................................................. 390,985 389,119
Staff Welfare ............................................................................................................................. 583,158 489,061
TOTAL .............................................................................................................. 18,499,566 15,207,947
Provident Fund and Gratuity ............................................................................................ 354,494 170,023
Staff Welfare ............................................................................................................................. 103,244 105,685
Audit Fees ................................................................................................................................ 50,000 55,100
Brokerage ................................................................................................................................ 9,720 –
Tax Audit Fees ......................................................................................................................... 10,000 –
Advertisement Expenses .................................................................................................... 97,149 –
Travelling Expenses (Include - Rs.165,104 incurred by .......................................... 448,606 583,657
Director) (Previous Year Rs.207,838)
Foreign Travelling Expenses (Include Rs.Nil for Directors)
(Previous Year Rs. Nil for Directors) ................................................................................. – 36,020
Printing and Stationery ....................................................................................................... 26,337 32,458
Postage, Telephone and Courier Charges .................................................................... 377,480 508,446
Buildings .......................................................................................................................... 2,998 10,840
Plant and Machinery ................................................................................................... 12,630 56,028
Others ............................................................................................................................... 17,257 42,743
General Expenses ................................................................................................................... 340,885 206,488
Rent ................................................................................................................................ 434,140 348,000
Sales Promotion and Advertisement ............................................................................. 2,098 84,788
Insurance ................................................................................................................................ 252,812 297,622
Cost of Software and Maintenance ................................................................................ 6,179 22,693
Legal and Professional Charges ....................................................................................... 809,558 828,985
Power, Fuel and Water Charges ........................................................................................ 28,394 36,569
Bank Commission and Other Charges .......................................................................... 3,336 809
Recruitment Expenses ......................................................................................................... 126,190 266,435
Bad Debts ................................................................................................................................ 34,573 –
Rates and Taxes ....................................................................................................................... 7,120 7,920
TOTAL .............................................................................................................. 7,884,739 7,030,580

Schedules

(Amount in Rs.)

Particulars As at Additions Deductions As at Upto During On Total upto As at As at

1st April, during the during the 31st March, 31st March, the Deletions 31st March, 31st March, 31st March,
2005 period period 2006 2005 period 2006 2006 2005
Commercial Rights 12,000,000 – – 12,000,000 2,400,000 2,400,000 – 4,800,000 7,200,000 9,600,000

Plant and Machinery 69,580 68,291 – 137,871 7,119 39,424 – 46,543 91,328 62,461
Furniture & Fixtures – 34,000 – 34,000 – 1,585 – 1,585 32,415 –
Office Equipment – 6,750 – 6,750 – 914 – 914 5,836 –
Total (a) 12,069,580 109,041 – 12,178,621 2,407,119 2,441,923 – 4,849,042 7,329,579 9,662,461
Previous Year – 12,069,580 – 12,069,580 – 2,407,119 – 2,407,119 9,662,461 –
115
Schedules
I. SIGNIFICANT ACCOUNTING POLICIES
Preparation of Financial Statements

The financial statements have been prepared to comply in all material respects with the mandatory Accounting Standards issued
by The Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
The financial statements have been prepared under the historical cost convention, on the basis of going concern and on accrual
method of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) and provisions of Companies Act,
1956 as adopted consistently by the Company. All income and expenditure having a material bearing on financial statements are
recognised on accrual basis.
Fixed Assets
Tangible and intangible Fixed Assets are stated at acquisition cost less accumulated depreciation. The cost comprises of purchase
price and any attributable cost of bringing the asset to its working conditions to its intended use.
Depreciation and Amortisation

Depreciation is provided on Written Down Value Method in accordance with the Companies Act, 1956, except for the items
mentioned below and all the individual items costing Rs.5,000 or less have been fully written off.
The rates of depreciation are in accordance with Schedule XIV to the Companies Act, 1956 on a pro-rata basis except as given below:
Commercial Rights - To be amortized over five years on Straight Line Method.
Revenue Recognition
Revenue from software projects and services is recognised on the basis of man hours completed.
Retirement Benefits to Employees

a. Contribution in respect of payments to Employees’ Provident Fund is charged to revenue. The Company has contributed to
Employees’ Provident Fund maintained by Government of India being the equal amount of contribution as made by
employees.
b. In accordance with the Payment of Gratuity Act, 1972, the Company provides the benefit retirement plan and the contribution
to the same is charged to revenue. Leave encashment is provided as per the rules of the Company.
Income Taxes
Income tax comprises the current tax provision, net change in the deferred tax asset or liability in the year and the provision for
fringe benefit tax. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences
between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets are recognized subject
to management’s judgment that realization is virtually certain. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Earnings Per Share
Basic Earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year.
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow
of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at
each Balance Sheet date and adjusted to reflect the current best estimates.
General
Accounting policies not specifically referred to are consistent with the Indian Generally Accepted Accounting Principles (GAAP).

Schedules
II. NOTES TO ACCOUNTS
1. Quantitative Details
The Company is engaged in obtaining and executing development projects for development and maintenance of computer
software and to provide systems and services in automation, computerisation and related activities. The sale of the services
is of such nature which can not be expressed in generic unit. Therefore, it is not possible to give quantitative details of sales
and certain information as required under paragraphs 3, 4C, 4D of part II, Schedule VI of the Companies Act, 1956.
2. Contingent Liabilities
There are no contingent liabilities existing as at Balance sheet date. (Previous Year: Nil)
3. Remuneration to Auditors (Amount in Rs.)
Particulars For the year ended For the period ended

Audit Fees 50,000 55,100
Other Services (Tax Audit ) 10,000 –
Out of pocket expenses 1,076 –
4. Remuneration to Managing Director (Amount in Rs.)

Particulars For the year ended For the period ended
Salaries and incentive 2,435,811 2,113,333
5. Income Taxes
The Company has provided for income tax, fringe benefit tax and deferred tax asset. Provision for income taxes has been
made in terms of Accounting Standard 22 “Accounting for Taxes on Income.”
Deferred tax asset and liability is measured using enacted tax rates expected to apply to taxable income in the years in which
the timing differences are expected to be recovered or settled.
Deferred tax assets and liabilities are as below –
Particulars Difference Amount (Rs.) Amount (Rs.)
Deferred tax liability on account of
a) Depreciation 464,093 156,214
Deferred tax assets on account of
a) Preliminary expenses 26,790 9,017
b) Leave encashment 500,000 168,300
c) Net deferred tax Asset 21,103
6. Related Party Transactions

The details of related party transactions are as under: (Amount in Rs.)
No. Particulars Holding Company Key Management Personnel
1 Services rendered 2,302,188
2 Services received 750,000
3. Claims received for expenses 369,311
4. Claims raised for expenses 288,325
5. Remuneration 2,435,811
Debit balances outstanding Remuneration is Rs. 426,153.
An amount of Rs. 498,778 is receivable from Kale Consultants Limited, the Holding Company as at 31st March, 2006.

Schedules
Enterprises under same management : Kale Softech, Inc., USA

Kale Consultants Australia Pty. Ltd., Australia
Kale Technologies Ltd., UK
Kale Consultants Ltd., India
Antah Kale Sdn. Bhd., Malaysia
Key Management Personnel : Prakash Alkutkar, Managing Director
7. Segmental Reporting
Segment reporting disclosures under Accounting Standard 17:
The Company has only one division viz; Software Projects and Services Division. This, in context of Accounting Standard 17 on
segment reporting issued by The Institute of Chartered Accountants of India, is considered to constitute one single segment.
8. Impairment of Assets
The Accounting Standard 28 “Impairment of Assets” issued by The Institute of Chartered Accountants of India comes into
effect in respect of accounting period commencing on or after 1st April, 2004. The amount of impairment losses during the
current financial year is nil.
9. Provisions, Contingent Assets and Liabilities

Disclosure in respect of provisions, contingent assets and liabilities as required by Accounting Standard 29.
The carrying amount at the beginning towards provision for employee dues, statutory dues and expenses were Rs. 1,265,100.
The additional provision made for the year was Rs. 1,072,164 and payments made during the year were Rs. 219,100. The
carrying amount at the end of the year was Rs. 2,118,164.
• The Company is following accrual method of accounting in respect of liabilities and provisions. The provisions have been made
on actual basis wherever information is available and in other cases the same is estimated on the basis of past records.
• The expected timing of any resulting outflow and economic benefits depends on contractual terms, obligation and such
other factors depending on case to case basis.
• The management expects no reimbursements.
10. Others
a. Expenditure in foreign currency towards advance to employees was Rs. Nil (Previous Year Rs. 36,020)
b. There are no contracts remaining to be executed on capital account (net of advances), hence no provision is required.
(Previous Year: Nil)
c. Computation of net profit and commission payable to the Managing Director as per Section 349 of the Companies Act
has not been given as no commission is payable to the Managing Director during the year ended March 31, 2006.
d. The Company has not availed any secured loan during the year.
e. Small Scale Industrial Undertakings have been identified by the Company on the basis of Information provided to it by
its suppliers. As at 31st March, 2006 there were no dues outstanding for more than thirty days to Small Scale Industrial
Undertakings.
f. In the opinion of the Board, the current assets, loans and advances have been stated at a value realisable in the ordinary
course of business.
g. There are no bank guarantees outstanding as at 31st March, 2006.
h. Previous year figures have been regrouped and rearranged wherever necessary.
For M/s. D.G. Kurundwadkar For and on behalf of Board of Directors


Place : Mumbai
Date : 25th April, 2006.

Balance Sheet Abstract
Balance Sheet Abstract and Company’s General Business Profile (Part IV)
I Registration Details
Registration No. U72200PN2004PLC019058
Balance Sheet Date 31st March, 2006 State Code 11
II Capital raised during the year (Amount in Rs.’000)
Public Issue Nil Rights Issue Nil
Bonus Shares Nil Private Placement Nil
III Position of Mobilisation and Deployment of Funds (Amount in Rs.’000)
Total Liabilities 17,404 Total Assets 17,404
Sources of Funds
Paid-up Capital 858 Reserves and Surplus 15,546
Secured Loans Nil Unsecured Loans 1,000
Deferred Tax Liability Nil Deferred Tax Asset (Net) 21
Application of Funds
Net Fixed Assets 7,330 Investments Nil
Net Current Assets 10,054 Miscellaneous Nil

Expenditure
Accumulated Losses Nil
IV Performance of the Company (Amount in Rs.’000)
Total Income 34,481 Total Expenditure 28,826
Profit/(Loss) before Tax 5,655 Profit/(Loss) after Tax 3,552
Earnings per Share (Rs.) 41.41 Dividend (%) Nil
V Generic names of principal services of the Company (as per monetary terms)
Item Code No. (ITC Code) 852490
Product Description Computer Software

For the Year Ended For the PeriodEnded

Cash Flow Statement 31st March, 2006 31st March, 2005
Cash Flow from Operating Activities
Net Profit / (Loss) Before Tax ................................................................................................................ 3,552,357 259,878

Adjustments for :
Add : Depreciation ............................................................................................................................... 41,923 7,119
Amortisation of Commercial Rights .................................................................................. 2,400,000 2,400,000
Less : Miscellaneous Income ............................................................................................................ 102,539 66,399
Operating Profit/(Loss) Before Working Capital Changes

Adjustment for :
(Increase)/Decrease in Sundry Debtors ........................................................................................... (5,739,958) (3,762,384)
(Increase)/Decrease in Loans and Advances ................................................................................. (3,350,233) (1,015,307)
Increase/(Decrease) in Current Liabilities and Provisions ........................................................ 969,922 1,606,617
Cash Generated from Operations

Less : Direct Tax paid ................................................................................................................................ 2,150,000 125,000
Add : Miscellaneous Income ................................................................................................................ 102,539 66,399
Net Cash Flow from Operating Activities (A) ........................................................... 24,011 (379,077)
Increase in Deferred Tax Liability/Asset (B) ............................................................. (47,370) 26,267
Cash Flow from Investing Activities

Consideration towards transfer of contracts to Kale Consultants Ltd. – 12,000,000
Additions to Fixed Assets (including Capital WIP) ....................................................................... (109,041) (69,580)
Net Cash used in Investing Activities (C) .................................................................. (109,041) (12,069,580)
Cash Flow from Financing Activities

Proceeds from issue of Share Capital ............................................................................................... – 12,592,096
Increase/(Decrease) in Unsecured Loans ........................................................................................ 302,584 1,302,584
Net Cash from Financing Activities (D ) ..................................................................... (302,584) 13,894,680
NET CASH (A+B+C+D) .................................................................................................. (434,984) 1,472,290

Cash and Cash Equivalents at the beginning of the period .................................................... 1,472,290 –
Cash and Cash Equivalents at the end of the period ................................................................. 1,037,306 1,472,290
Net Increase/(Decrease) in Cash and Cash Equivalents .......................................... (434,984) 1,472,290

Place : Mumbai

1. Annual General Meeting

th
Date and Time - Tuesday, 25 July, 2006 at 3.30 p.m.
Venue - Pudumjee Assembly Hall, Mahratta Chamber of Commerce,
Industries and Agriculture, Tilak Road, Pune 411 002.
th th
Book Closure Dates - Monday, 17 July, 2006 to Tuesday, 25 July, 2006 (both days inclusive)
Purpose - Annual General Meeting
2. Registered Office Address

Kale Enclave, 685/2B & 2C, 1st Floor, Sharada Arcade, Satara Road, Pune - 411 037.
3. Listing Details
No. of securities listed - 1 to 12846090*
Market Lot - 50 shares for physical mode.
* Out of this, 1,100 equity shares have been forfeited for non-payment of allotment money.
Name, Address & Telephone Scrip Code Date of Listing Listing fees
Nos. of the Stock Exchanges for 2005-06
th
Pune Stock Exchange Limited 16268 - KALCO 11 November, 1999 Paid
Shivleela Chambers, 752, Sadashiv Peth,
R. B. Kumthekar Marg, Pune – 411 030
Tel. : (020) 24485701
th
The Stock Exchange, Mumbai 532268 16 November, 1999 Paid
Phiroze Jeejeebhoy Towers, Dalal Street,
Fort, Mumbai – 400 001
Tel. : (022) 22721233 / 34
st
National Stock Exchange of India Limited KALECONSUL 1 December, 1999 Paid
Exchange Plaza, 5th Floor, Plot No. C/1,
G Block, Bandra Kurla Complex,
Bandra (East), Mumbai – 400 051
Tel. : (022) 2659 8100 –14
4. Share Transfer System
Shares of the Company shall be compulsorily traded in dematerialised form by all investors with effect from 26th June, 2000,
vide SEBI circular, as intimated by Pune Stock Exchange Limited. The Share Transfer Committee of the Board usually meets
every 15 days to approve physical transfer of shares.
Break up of shareholding in physical and demat mode (As on 31st March, 2006)
Type of Holding Percentage to Share Capital
Physical 8.76
Demat 91.24
Total 100.00

5. ISIN Numbers
NSDL:
ISIN No. Description Type of Shares

INE793A01012 KALE CONSULTANT EQ Equity Share
CDSL:
ISIN No.
INE793A01012
6. Registrar and Share Transfer Agent (address for correspondence)

Karvy Computershare Private Limited
“Karvy House”, 46, Avenue 4, Street No. 1,
Banjara Hills,
Hyderabad – 500 034
Tel. No. (040) 23420818 / 23420828
Fax No. (040) 23420814
Contact Person: Madhusudhan / Mohsin
Email: madhusudhan@karvy.com
7. Kale Share Price (NSE) Vs. NSE S&P CNX Nifty Index
Month Kale Share Price (Rs.) NSE S&P CNX Nifty

High Low High Low
April, 2005 87.00 72.30 2084.90 1896.30
May, 2005 89.40 72.10 2099.40 1898.20
June, 2005 100.80 81.10 2226.20 2061.40
July, 2005 117.40 87.70 2332.60 2171.30
August, 2005 110.00 84.80 2426.70 2294.30
September, 2005 122.80 91.50 2633.90 2382.90
October, 2005 110.00 74.10 2669.20 2307.50
November, 2005 92.75 76.60 2727.10 2366.80
December, 2005 90.00 78.60 2857.00 2642.00
January, 2006 104.00 87.00 3005.10 2783.90
February, 2006 102.00 88.10 3090.30 2928.10
March, 2006 97.95 80.80 3433.90 3064.00

8. Shareholding Pattern as on 31st March, 2006
Sr. No. Category No. of Shares held Percentage
1 Promoters
– Indian Promoters 2,092,878 16.29
– Foreign Promoters 2,469,100 19.22
2 Mutual Funds and UTI 927,234 7.22
3 Banks, FIs, Insurance Companies, Institutions 600 0.01
4 Foreign Institutional Investors 50 0.00
5 Corporate Bodies 1,127,687 8.78
6 Indian Public 5,263,496 40.98
7 NRIs/ OCBs/Foreign Nationals 633,391 4.93
8 Trusts 265,511 2.07
9 NSDL/CDSL in Transit 65,043 0.50
TOTAL 12,844,990 100.00
9. Distribution of Shareholding as on 31st March, 2006
Shareholding Range No. of Shareholders Percentage Shareholding Percentage
Upto 500 19511 92.28 2,294,601 17.96

501 – 1000 890 4.26 751,808 6.00
1001 – 2000 361 1.59 563,817 4.16
2001 – 3000 142 0.69 370,667 2.97
3001 – 4000 54 0.23 198,257 1.41
4001 – 5000 68 0.29 324,689 2.31
5001 – 10000 66 0.31 487,890 3.90
10001 and above 66 0.35 7,853,261 61.29
TOTAL 21158 100.00 12,844,990 100.00
10. Investor Complaints

During the year, the Company received 29 complaints all of which were resolved during the year and there were no complaints
pending at the end of the year.
The Company has received letters from Stock Exchanges confirming NIL complaints pending, the details of which are given
below:
Stock Exchange Date of Letter
National Stock Exchange of India Limited 7th April, 2005
Pune Stock Exchange Limited 11th April, 2005
The Stock Exchange, Mumbai 12th April, 2005
National Stock Exchange of India Limited 8th July, 2005
Pune Stock Exchange Limited 7th July, 2005
The Stock Exchange, Mumbai 7th July, 2005
th
National Stock Exchange of India Limited 7 October, 2005
The Stock Exchange, Mumbai 10th October, 2005
National Stock Exchange of India Limited 5th January, 2006
The Stock Exchange, Mumbai 5th January, 2006
The Company has set up an Investors’ Grievance Committee, which monitors overall investor complaints in co-ordination
with Registrar and Share Transfer agent.

11. Financial Calendar
Unaudited / Audited Financial Results Quarter / Year ended Month of approval of Financial Results
Unaudited financial results for the 30th June, 2006 July, 2006
quarter ended
Unaudited financial results for the 30th September, 2006 October, 2006
quarter and half year ended
Unaudited financial results for the 31st December, 2006 January, 2007
quarter ended
Audited financial results for the year ended 31st March, 2007 April/May/June, 2007

AGM Notice

Regd. Off.: Kale Enclave, 685/2B & 2C, 1st Floor, Sharada Arcade, Satara Road, Pune - 411 037.
NOTICE
NOTICE IS HEREBY GIVEN THAT the twentieth Annual General Meeting of the members of the Company will be held on Tuesday, the
25th day of July, 2006 at 3.30 p.m. at Pudumjee Assembly Hall, Mahratta Chamber of Commerce, Industries and Agriculture, Tilak Road,
Pune – 411 002 to transact the following business:
ORDINARY BUSINESS:
1. To receive, consider and adopt the Audited Annual Accounts for the year ended 31st March, 2006, together with the Reports of the
Directors and Auditors thereon.
2. To declare a dividend on equity shares.
3. To appoint a Director in place of Mr. Narendra Kale, who retires by rotation and being eligible offers himself for re-appointment.
4. To appoint Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the
next Annual General Meeting and to fix their remuneration.
SPECIAL BUSINESS:
5. To consider and if thought fit, to pass with or without modification, the following resolution as a Special Resolution:
“RESOLVED THAT in partial modification of the resolution passed at the Annual General Meeting of the Company held on 5th
September, 2005 and in accordance with the provisions of sections 198, 268, 309, 310 and other applicable provisions, if any, of the
Companies Act, 1956 (hereinafter referred to as “the Act”), read with Schedule XIII to the Act, including any statutory modification(s)
or re-enactment thereof for the time being in force and subject to the approval of the Central Government, the consent of the
Company be and it is hereby accorded to the revision in the terms of remuneration payable to Mr. Vipul Jain, Managing Director
(including remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of his
appointment), with effect from 1st April, 2006 for the remainder of his tenure i.e. until 31st May, 2008 on the terms and conditions as
set out below:
A. Basic Salary
Basic Salary of Rs. 3,375,000/- (Rupees Three Million Three Hundred and Seventy Five Thousand only) per annum with a yearly
increase not exceeding 25%.
B. Perquisites and Allowances
i) In addition to salary, perquisites like accommodation (furnished or otherwise) or house rent allowance in lieu thereof, house
maintenance allowance, together with reimbursement of expenses or allowances or utilities such as gas, electricity, water
and furnishings, repairs, servant / gardener salaries, club fees etc., not exceeding 80% of the basic salary.
For the purposes of calculating the aforesaid ceiling of 80%, perquisites shall be evaluated as per Income Tax Rules, wherever
applicable, and in the absence of any such rules, perquisites shall be evaluated at actual cost.
ii) Reimbursement of medical expenses for self and family members subject to ceiling of one month’s basic salary which can be
accumulated upto a maximum of 3 years.
iii) Leave Travel Assistance: As per rules of the Company.
iv) Insurance: As per rules of the Company.
v) Provision of driver/Allowance for driver’s salary: As per rules of the Company.
vi) Company Car and Telephones at residence as per rules of the Company.
C. Other Benefits
i) Employer’s Contribution to Provident Fund
ii) Gratuity: As per rules of the Company.
iii) Encashment of Leave: As per rules of the Company.
D. Commission
Commission – 1% of the net profits of the Company calculated in accordance with the provisions of the Companies Act, 1956.
“RESOLVED FURTHER THAT in the absence or inadequacy of profits in any financial year (a) subject to the approval of the Central
Government, the remuneration payable to Mr. Vipul Jain by way of salary, perquisites, other allowances, benefits and commission as
aforesaid shall be paid as minimum remuneration and (b) if the approval of the Central Government as stated in (a) above, is not
received, the remuneration payable to Mr. Vipul Jain shall be the maximum amount permitted as per Schedule XIII, as amended from
time to time.
“RESOLVED FURTHER THAT the Board be and is hereby authorised to take all such steps, including application to the Central
Government, as may be necessary, proper and expedient to give effect to this resolution.”

AGM Notice
“RESOLVED THAT pursuant to the provisions of Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956
(“the Act”), the Articles of Association of the Company and the provisions of the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“the Guidelines”) (including any statutory
modification(s) or re-enactment of the Act or the Guidelines for the time being in force) and subject to such other approvals,
permissions and sanctions as may be necessary under any applicable laws and subject to such conditions and modifications as may
be prescribed or imposed while granting such approvals, permissions and sanctions which may be agreed to by the Board of Directors
of the Company (hereinafter referred to as “the Board” which term shall be deemed to include any Committee including the
Remuneration and Compensation Committee constituted by the Board), the consent of the Company be and is hereby accorded to
the Board to create, offer, issue and allot at any time to or to the benefit of permanent employees of the Company, present and future,
including any Directors of the Company, present and future, whether whole-time or otherwise under a new scheme titled “Kale
Consultants Employees Stock Option Scheme 2006” (hereinafter referred to as the “ESOP” or “Scheme” or “Plan”) such number of
equity shares and/or equity linked instruments (including options), and/or any other instruments or securities (“hereinafter collectively
referred to as Securities”) of the Company which could give rise to issue of equity shares not exceeding 1,200,000, at such price, in
one or more tranches, and on such terms and conditions as may be fixed or determined by the Board in accordance with the Guidelines
or other provisions of the law or guidelines issued by the relevant Authority or as may be prevailing at that time.
“RESOLVED FURTHER THAT issue of Equity Shares to any non-resident employee or any non-resident director shall be subject to
such approvals, permissions or consents as may be necessary in this regard under applicable laws.
“RESOLVED FURTHER THAT the new Equity Shares to be issued and allotted by the Company in the manner aforesaid shall rank pari
passu, in all respects with the then existing fully paid up Equity Shares of the Company.
“RESOLVED FURTHER THAT for the purpose of giving effect to any creation, offer, issue, allotment or listing of the securities, the
Remuneration and Compensation Committee be and is hereby authorized on behalf of the Company to evolve, decide upon and
bring into effect the Scheme and make modifications, changes, variations, alterations or revisions therein from time to time as may
be specified by any statutory authority and to do such acts, deeds, matters and things as it may in its absolute discretion deem fit or
necessary or desirable for such purpose and with power on behalf of the Company to settle any questions, difficulties or doubts that
may arise in this regard without requiring the Board to secure any further consent or approval of the members of the Company.”
“RESOLVED THAT pursuant to the provisions of Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956
(“the Act”), the Articles of Association of the Company and the provisions of the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“the Guidelines”) (including any statutory
modification(s) or re-enactment of the Act or the Guidelines for the time being in force) and subject to such other approvals,
permissions and sanctions as may be necessary under any applicable laws and subject to such conditions and modifications as may
be prescribed or imposed while granting such approvals, permissions and sanctions which may be agreed to by the Board of Directors
of the Company (hereinafter referred to as “the Board” which term shall be deemed to include any Committee including the
Remuneration and Compensation Committee constituted by the Board), the consent of the Company be and is hereby accorded to
the Board to create, offer, issue and allot at any time to or to the benefit of permanent employees of any subsidiary(ies) of the
Company, present and future, including any Directors of any subsidiary(ies) of the Company, present and future, whether whole-time
or otherwise under a new scheme titled “Kale Consultants Employees Stock Option Scheme 2006” (hereinafter referred to as the
“ESOP” or “Scheme” or “Plan”) such number of equity shares and/or equity linked instruments (including options), and/or any other
instruments or securities (“hereinafter collectively referred to as Securities”) of the Company which could give rise to issue of equity
shares not exceeding 1,200,000, at such price, in one or more tranches, and on such terms and conditions as may be fixed or determined
by the Board in accordance with the Guidelines or other provisions of the law or guidelines issued by the relevant Authority or as
may be prevailing at that time.
“RESOLVED FURTHER THAT issue of Equity Shares to any non-resident employee or any non-resident director shall be subject to
such approvals, permissions or consents as may be necessary in this regard under applicable laws.
“RESOLVED FURTHER THAT the new Equity Shares to be issued and allotted by the Company in the manner aforesaid shall rank pari
passu, in all respects with the then existing fully paid up Equity Shares of the Company.
“RESOLVED FURTHER THAT for the purpose of giving effect to any creation, offer, issue, allotment or listing of the securities, the
Remuneration and Compensation Committee be and is hereby authorized on behalf of the Company to evolve, decide upon and
bring into effect the Scheme and make modifications, changes, variations, alterations or revisions therein from time to time as may
be specified by any statutory authority and to do such acts, deeds, matters and things as it may in its absolute discretion deem fit or
necessary or desirable for such purpose and with power on behalf of the Company to settle any questions, difficulties or doubts that
may arise in this regard without requiring the Board to secure any further consent or approval of the members of the Company.”
By Order of the Board of Directors

For Kale Consultants Limited
Place : Mumbai Vipul Jain

Date : 25th April, 2006 Managing Director

AGM Notice
NOTES:
1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF
AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.
2. PROXY, DULY EXECUTED, IN ORDER TO BE VALID, SHOULD REACH THE REGISTERED OFFICE OF THE COMPANY AT LEAST 48
HOURS BEFORE THE MEETING.
3. The Register of Members and Share Transfer Books of the Company will remain closed from Monday, the 17th day of July, 2006
to Tuesday, the 25th day of July, 2006 (both days inclusive) for the purpose of dividend and Annual General Meeting.
4. Members are requested to approach M/s. Karvy Computershare Private Limited, “Karvy House”, 46, Avenue 4, Street No. 1,
Banjara Hills, Hyderabad 500034, in case they have not encashed the interim dividend warrant - 2000, till date.
5. Members/ Proxy-holders are requested to bring copy of the Annual Report to the Meeting.
6. Members desiring any information as regards the accounts and operations of the Company are requested to send their
queries to the Company, at least 10 days in advance, so as to enable the management to keep the information ready.
7. Members who are holding shares in more than one folio are requested to intimate Karvy Computershare Private Limited, the
details of all their folio numbers for consolidation into a single folio.
8. The Equity shares of the Company are listed on Pune Stock Exchange Limited b) The Bombay Stock Exchange Limited and c)
National Stock Exchange of India Limited.



AGM Notice
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

ITEM NO. 5
At the Annual General Meeting of the Company held on 5th September, 2005, the Members had approved increase in remuneration
payable to Mr. Vipul Jain, Managing Director, with effect from 1st April, 2005, with an annual increase not exceeding 25% in the basic
salary.
The Central Government, vide letter no. 2/68/2005-CL.VII dated 30th November, 2005 approved remuneration of Rs. 4,95,640/- per
month, payable to Mr. Vipul Jain with effect from 1st April, 2005, without any annual increase.
As approved by the Remuneration & Compensation Committee, it is now proposed to make fresh application to the Central
Government seeking approval for increase in remuneration of Mr. Vipul Jain in terms of a special resolution set out at Item no. 5 of
the Notice.
This Explanatory Statement together with the accompanying Notice shall be treated as an abstract under section 302 of the Companies
Act, 1956.
The resolution as set out in Item No. 5 of the Notice will be placed before the meeting for approval of the Members. Your Directors
recommend the Resolution at Item No. 5 for your approval.
None of the Directors of the Company, other than Mr. Vipul Jain, is concerned or interested in the resolution set out in Item No. 5 of
the Notice.
ITEM NOS. 6 & 7

The Members, at the Extra Ordinary General Meeting held on 6th February, 2003, had approved the issue of employees stock options,
not exceeding 1,800,000 equity shares of the Company, to the permanent employees and directors of the Company and its subsidiary
under Kale Consultants Limited Employees Stock Option Scheme. The number of options in force under the said Scheme is 868,353
and the balance options are 385,557.
To motivate the employees and to enable them to participate in the long term growth and financial success of the Company and
with a common objective of maximising the shareholder value, your Board proposed to introduce, in addition to the existing Scheme,
a new Employee Stock Option Scheme (ESOP). The ESOP would enable the Company to attract and motivate employees by rewarding
performance as also to retain best talents and would further enable the employees to develop a sense of ownership with the Company.
It is now proposed to introduce a new Scheme called Kale Consultants Limited Employees Stock Option Scheme 2006 (ESOP Scheme
2006) for the benefit of the permanent employees and directors of the Company as well as the employees and directors of the
subsidiary companies.
ESOP Compensation Committee: The Remuneration and Compensation Committee of the Board of Directors will administer the
ESOP Scheme 2006 to include the powers and functions exercisable by the Compensation Committee referred to in the SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, consisting of a majority of independent Directors, for
the administration and superintendence of ESOP Scheme 2006.
The Remuneration and Compensation Committee will formulate the detailed terms and conditions of the ESOP Scheme 2006.
The Remuneration and Compensation Committee will, specify, inter alia, the following:
• The time when the Options are to be granted.
• The number of tranches in which the Options are to be granted & the number of Options to be granted in each such tranche.
• The criteria for determining the number of Options to be granted to Eligible Employees.
• The terms and conditions subject to which the Options granted would vest in the Eligible Employee.
• The terms and conditions subject to which the Options vested would be exercised by the Eligible Employee.
• The conditions under which options vested in employees may lapse in case of termination of employment for misconduct
• The number of Options to be apportioned/allocated for various grades of employees.
• The number of Options to be granted to each Eligible Employee.
• Assignment of weightage to grade of employee and such other criteria as may be determined by the Board.
• The number of Options reserved, if any, for granting to new employees who would join the services of the Company.
• Deciding the treatment of unvested Options upon termination of employment or upon a Director ceasing to hold office.
• Framing suitable policies and systems to ensure that there is no violation by any participant of Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 1992 and Securities Exchange Board of India (Prohibition of Fraudulent and
Unfair Trade Practices relating to Securities Market) Regulations, 1995,
• Framing appropriate procedures for granting, vesting and exercising of Options.
• Procedures for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights
issues, bonus issues and other corporate actions.
• The grant, vest and exercise of Options in case of employees who are on long leave.
• Procedure for cashless exercise of options.

AGM Notice
The terms prescribed by the Compensation Committee shall be final and binding on the employees.
The following is the explanatory statement, which sets out various disclosures as required by clause 6 of the Securities & Exchange
Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 (hereinafter referred to as
SEBI ESOP Guidelines).
The Salient features of the ESOP are as follows:-
1. Total number of options to be granted: The total number of options to be granted under the ESOP Scheme 2006 will not exceed
1,200,000. The number of tranches in which the options may be granted and the number of options to be granted in each
tranche shall be decided by the Remuneration and Compensation Committee.
2. Identification of classes of employees entitled to participate in the ESOP: Persons entitled to participate in the ESOP shall be the
persons who are “employees” of the Company, including directors of the Company, whether in employment or not and employees
and directors of the subsidiary companies as defined in SEBI ESOP Guidelines (including any statutory modification(s) or re-
enactment of the Act or Guidelines, for the time being in force). (Note: Mr. Narendra Kale, Chairman & Mr. Vipul Jain, Managing
Director, being promoter Directors, shall not be entitled to participate in the ESOP Scheme 2006).
Employees may be granted Stock Option based such criteria as the Remuneration and Compensation Committee in its absolute
discretion decide.
The options granted to an employee will not be transferable to any person and shall not be pledged, hypothecated, mortgaged
or otherwise alienated in any manner.
3. Requirements of vesting and period of vesting: The Remuneration and Compensation Committee shall have sole discretion to
decide the vesting period. Minimum vesting period shall be one year from the date of grant of options. Vesting may take place in
tranches, as may be stipulated by the Remuneration and Compensation Committee.
4. Maximum period within which the options shall be vested: The maximum period within which all the options shall be vested
shall not exceed 3 years from the date of grant, or such other time period as may be decided by the Remuneration and
Compensation Committee, from time to time.
5. Exercise Price or Pricing formula: The Remuneration and Compensation Committee may, in its absolute discretion decide the
exercise price and that the exercise price may differ in respect of options that may be granted in each tranche.
6. Exercise Period and the process of Exercise: The Exercise period shall commence from the date of vesting, and will expire not
later than two years from the date of vesting of options, or such other time period as may be decided by the Remuneration and
Compensation Committee, from time to time.
The options will be exercisable by the Employees by a written application to the Company to exercise the options in such manner,
and on execution of such documents, as may be prescribed by the Remuneration and Compensation Committee from time to
time.
7. Appraisal Process for determining the eligibility of the employees to ESOP Scheme 2006: The appraisal process for determining
the eligibility of the employee will be specified by the Remuneration and Compensation Committee, and will be based on criteria
such as seniority of employee, length of service, performance record, merit of the employee, future potential contribution by the
employee and/or such other criteria that may be determined by the Remuneration and Compensation Committee at its sole
discretion.
8. Maximum number of options to be issued per employee and in aggregate: The maximum number of options to be granted per
employee in any one year will not be equal to or exceed 128,449 i.e. 1% of the issued equity share capital of the Company as on
31st March, 2006 and the maximum number of options to be granted, in aggregate, shall not exceed 1,200,000.
9. Disclosure and Accounting Policies: The Company shall conform to the accounting policies specified in clause 13.1 of SEBI ESOP
Guidelines.
10. Method of valuation: The Company shall use Binomial method for valuation of options.
11. In case the Company calculates the employee compensation cost using the intrinsic value of the stock options, the difference
between the employee compensation cost so computed and the employee compensation cost that shall have been recognized
if it had used the fair value of the options, shall be disclosed in the Directors report and also the impact of this difference on
profits and on EPS of the Company shall also be disclosed in the Directors’ report.
As the Scheme provides for issue of shares to be offered to persons other than existing shareholders of the Company, consent of
the members is sought pursuant to Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 and as
per clause 6 of the SEBI ESOP Guidelines.
The resolution as set out in Item Nos. 6 & 7 of the Notice will be placed before the meeting for approval of the Members. Your
Directors recommend the Resolution at Item Nos. 6 & 7 for your approval.
None of the Directors of the Company, are in any way, concerned or interested in the resolution, except to the extent of the
securities that may be offered to them under the Scheme.



This page has been kept blank intentionally.

PROXY FORM
I/We____________________________________________________________________________________________________
of _________________________________ being a member(s) of Kale Consultants Limited hereby appoint Mr./ Mrs./ Ms.
______________________________________________ of __________________________________________________________
in the district of ___________________________ or failing him / her Mr./ Mrs./ Ms. ________________________________________
of ______________________ in the district of ______________________ as my/our Proxy to attend and to vote for me/us on
my/our behalf at the Twentieth Annual General Meeting to be held on Tuesday, the 25th day of July, 2006 at 3.30 p.m. at Pudumjee
Assembly Hall, Mahratta Chamber of Commerce, Industries and Agriculture, Tilak Road, Pune 411 002 and at any adjournment
thereof.
Signed this ____________ day of ______________2006.
Folio No. : ____________ No. of Shares held : ___________________________ Affix

15 paise
Client Id : ____________ DP Id : ___________________________ revenue
stamp
Signature ________________________________
✃
NOTES :
1. Proxy Form to be valid shall be duly signed, stamped and dated and shall be deposited at the Registered Office of the Company
at least 48 hours before the time of the Meeting.
2. The members who hold shares in dematerialised form shall quote their Client ID and DP Id.
3. A shareholder may vote either for or against each resolution.

ATTENDANCE SLIP
I hereby record my presence at the Twentieth Annual General Meeting on Tuesday, the 25th day of July, 2006 at 3.30 p.m. at
Pudumjee Assembly Hall, Mahratta Chamber of Commerce, Industries and Agriculture, Tilak Road, Pune 411 002.
I certify that I am a registered member / valid proxy of the registered member of the Company.
Folio No. : ____________________________ No. of Shares held : ____________________________
Client Id : ____________________________ DP Id : ____________________________
________________________________ ________________________________
Name of Member / Proxy Signature of Member / Proxy
(in BLOCK letters)
Notes:
1. Please fill up this Attendance Slip and hand it over at the entrance of the meeting hall.
2. Members are requested to bring their copies of the Annual Report to the meeting.

Kale Annual Report 05 06

Transféré par

Informations du document

Description originale:

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Kale Annual Report 05 06

Transféré par

Droits d'auteur :

Formats disponibles

Contents

Board of Directors Letter to Shareholders .......................................... 2

KALE CONSULTANTS LIMITED 1

Greatness is not in where we stand, but in what direction we are moving.

- Oliver Wendell Holmes

KALE CONSULTANTS LIMITED 3

400 Revenue increased by 27%

150 119 .85

Depreciation and Amortisation Cost

50 Depreciation and Amortisation Cost increased by 34%

4 KALE CONSULTANTS LIMITED

Sr. No. Particulars 2001-02 2002-03 2003-04 2004-05 2005-06

1 Total Revenue 504.59 507.01 481.37 505.99 642.87

2 Operating Revenue 495.31 499.48 463.63 492.92 625.84

3 PBIDT 94.59 108.27 109.41 119.86 179.88

4 Operating PBT 20.27 31.92 31.67 36.72 69.62

5 PAT 20.26 31.42 31.66 7.52 64.84

6 Net Fixed Assets 380.98 394.10 350.20 359.75 419.97

7 Borrowings 86.56 97.82 150.56 166.49 120.85

8 Equity Capital 114.99 115.00 116.00 116.83 128.46

9 Net Worth 518.50 541.17 555.46 540.41 629.29

10 Capital Employed 605.06 638.99 706.02 706.90 750.14

11 EPS - Diluted (Rs) 1.76 2.73 2.75 0.10 5.17

KALE CONSULTANTS LIMITED 5

Financial Results Rs. in Million

Total ......................................................................................... 642.87 505.99

KALE CONSULTANTS LIMITED 7

Mr. Kale holds 1,015,000 equity shares of the Company.

8 KALE CONSULTANTS LIMITED

j) Employee-wise details of Options granted to

k) Diluted Earnings Per Share (EPS) pursuant to Rs. 5.17

KALE CONSULTANTS LIMITED 9

a) Exercise price equals market price 91.36

Pro Forma Adjusted Net Income and Earnings Per Share

Earning Per Share: Basic

Earning Per Share: Diluted

Fair value has been calculated using the Binomial Method.

Variables Date of Grant

1 Risk Free Interest Rate 6% 6%

10 KALE CONSULTANTS LIMITED

For and on behalf of the Board of Directors

Narendra Kale Vipul Jain

KALE CONSULTANTS LIMITED 11

Sr. Name Designation Qualification Age Date of Experience Gross Last

(*) Employed part of the year

KALE CONSULTANTS LIMITED

Research and Development (R&D)

Foreign exchange earning and outgo

For and on behalf of the Board of Directors

Narendra Kale Vipul Jain

KALE CONSULTANTS LIMITED 13

Name of Director Designation Category Other Directorships / Board Committees

Dates of Board Meetings

14 KALE CONSULTANTS LIMITED

Name of Director No. of Board Attendance at AGM

Mr. Narendra Kale 5 Yes

Currently the Board has four Committees –

Name of Director Category No. of Meetings Attended

Mr. K. K. Nohria (*) Independent Director 2

(*) Chairman of the Committee

KALE CONSULTANTS LIMITED 15

d. to oversee adequacy of internal control systems.

b) Investor Grievance Committee