DIRECTORS’ REPORT

The Members of

WALCHAND PEOPLEFIRST LIMITED

Your Directors present herewith the 88^th Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2008.

1. FINANCIAL RESULTS

(Rs. In Lacs)

	2007-08		2006-07
Profit before interest, depreciation and taxation		(87.03)		76.88
Profit on Sale of Training Business		906.44
Less: Interest	1.09		1.54
Depreciation/Amortisation	37.31		41.02
Provision for Taxation-current/earlier years	92.58		9.37
	130.98		51.93
		688.43		24.95
Deferred Tax recognised		(53.04)		227.67
Net Profit		635.39		252.62
Add: Balance brought forward		675.07		455.78
Less: Transferred to Reserve Fund		N.A		N.A
Amount available for appropriation		1310.46		708.40
Appropriations
Final Dividend		28.49		28.49
Dividend Tax		4.84		4.84
Balance carried forward		1277.13		675.07
Total		1310.46		708.40

2. DIVIDEND

The Board of Directors recommends 10% final dividend for the Financial Year ended March 31, 2008.

3. MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure & Development:

India’s economy has been one of the stars of global economies in recent years, growing at 8.7% in FY 2008, 9.2% in FY2007 and 9.6% in FY2006. While there was a marginal slowdown in 2007-08, overall growth has been supported by market reforms, huge FDI inflows, rising foreign exchange reserves, both an IT and real estate boom and a flourishing capital market.

During this period of stable growth, the performance of the Indian services sector has been particularly significant with a growth rate of 11.7% and it now contributes 55% of the GDP. The industrial sector grew by 9.2% in the same period and is now 27.5% of GDP. Agriculture is 17.5% of the Indian economy. Growth in the manufacturing sector has also complemented this with a steady rise of 9.4%. Additional factors that have contributed to the robust environment are sustained investments and a high savings rate of 34.8%.

Employment in India too, is going through dramatic changes. As per the report of the National Sample Survey organization, for the first time since Independence, employment has grown at a faster rate than population during the five year period from 2000 to 2005. Yet despite the growth in jobs, unemployment has also grown. According to the NSS report, the workforce participation rate has increased by 2.85% of total population.

Opportunities & Challenges:

Most of the nation’s job and economic growth has been generated by family-owned Indian enterprises and multinationals in industries such as IT, telecom, BPO and pharmaceuticals.

Maintaining high growth rates is a high priority for industries because they face increasingly stiff competition, most notably from China. But sustaining growth may be difficult due – ironically- to a lack of qualified people. Availability of suitable talent is becoming a “make or break” business issue which has made the value of good HR apparent to top executives. As a result, the HR profession is gaining both respect and attention. Faced with record growth level in some industries and skyrocketing attrition, HR professionals are spending 80% of their time on recruitment. Most important, finding people with the right skills is a problem. Retention, no matter which industry, is a nightmare. Another key problem is finding workers with the right mindset to meet the needs of the changing workplace. A dearth of middle managers also is a pressing problem as even for those managers already on the jobs, there is a gap in expertise and training. With the exception of relatively few managers with multinational experience, India’s homegrown managers are inadequately prepared to cope with global challenges coming from mergers and acquisitions, joint ventures and entry into new markets. While HR challenges facing many Indian industries are daunting and crucial to continued success, the number of HR leaders helping tackle the challenges are still small and HR has still not reached the strategic level that it should be.

Your company is well placed to address the above needs of industry. During the year we took substantial strides to reorganize our business to meet the various challenges towards supporting recruitment, training at entry-level and high level managers and providing development of HR professionals.

With the formation of the 100% subsidiary, Walchand TalentFirst, we are making significant investments to further consolidate our existing Dale Carnegie Training business with our pioneering Finishing School initiative as well as to expand our new operations of PerfomanSe Assessments and SHRM HR training. It has been a year for gearing up to achieve a quantum leap in the Talent Development and Management space through offering “Employability” training, support to recruitments through rapid screening and selections and further talent management with our Assessments services, Continuing Education and enhancement of professional HR capabilities in industry.

With our partnerships with established global leaders like Dale Carnegie Training, PerformanSe SAS and Society for Human Resources Management, and having built a very strong reputation and client base in India, your company has a unique set of world-class capabilities to service the Indian market needs. We are positioned and ready to maximize our business potential with this very large market opportunity.

Outlook, Risks & Concerns:

At the macro-level, like most of the world, India is facing testing times in 2008. Inflation has crossed 11%, the highest level seen in a decade. The rising costs of oil, food and resources all playing a part. The Indian stock market has fallen 40% in six months from its January 2008 high. USD 6 billion of foreign funds have flowed out of the country in the same period. A tighter monetary policy by the Government is expected to slow down the growth of the Indian economy.

Indian industry has begun to cut costs and there are reports on slower hiring and salary increases. It is not all slowdown, however. By global standards, the Indian economy and industry has a high growth outlook and there is optimism in the long-term health of the economy and domestic markets.

For your company, the market is yet to be penetrated deeply and the expansion prospects continue to be high. As companies are looking at greater cost-efficiencies, there is a trend towards outsourcing of training and non-core competencies. Further, there is a boom in the education sector with a growing number of new institutions, both private and public. This presents a very big opportunity for our Finishing School to partner with several educational institutions to enhance talent supply to industry.

Your company has a full all-India presence now and nearly 50 full time trainer resources, making us one of the largest players of our industry. As the first movers of the Finishing School concept and with our investments in place, we expect the Finishing School to give returns in the next couple of years, even as we grow our corporate training, HR training and Assessments businesses rapidly.

Cautionary Statement:

The statements made in this report describe the Company’s objectives, expectations and projections that may be forward looking statements. The actual results might differ materially from those expressed or implied depending on the economic conditions, government policies and other incidental factors, which are beyond the control of the Company and Management.

Segmentwise Performance:

The Company incorporated its wholly owned subsidiary viz. Walchand TalentFirst Limited during the year. The training business was transferred to this subsidiary. The revenue and results for the Investment Division and the Training Division for the relevant period are reported in the notes to Accounts.

Internal Control Systems and their Adequacy:

The Company has adequate and effective control systems, commensurate with its size and nature of business, to ensure that assets are efficiently used and the interest of the Company is safeguarded and the transactions are authorized, recorded and reported correctly. Checks and balances are in place to determine the accuracy and reliability of accounting data. The preventive control systems provide for well-documented policy, guidelines, and authorization and approval procedures. The Company has a full-fledged Internal Audit System to ensure that the policies and procedures laid down are adhered to. The Company has also developed a Risk Assessment policy and is reviewed by the Board of Directors/ Audit committee on a quarterly basis.

Financial Performance with respect to Operational Performance:

Total income achieved during the year under review by the Company is Rs 719.71 lakhs. After providing for taxation of Rs 92.58 Lakhs and recognition of Deferred Tax Liability of Rs 53.04 Lakhs, the Company made a Net Profit of Rs 635.39 Lakhs which includes profit on slump sale of training business of Rs 906.44 Lakhs.

As per the Consolidated Financial Statement, Total income achieved during the year under review by the Company (and its subsidiary) is Rs 1217.53 lakhs as against Rs 764.24 lakhs in the previous year. Training income for the Company (and its subsidiary) has increased to Rs 992.21 lakhs as against Rs 593.44 lakhs in the previous year showing an increase of more than 67%. After providing for taxation of Rs 93.58 Lakhs and recognition of Deferred Tax Liability of Rs 53.04 Lakhs, the Consolidated results for the Company show a Net Loss of Rs 605.16 Lakhs as against a profit after tax of Rs 252.62 Lakhs earned in the previous year (inclusive of Deferred Tax assets of Rs 227.67 Lakhs). The Net Loss in the Consolidated Results is mainly a result of non-recognition of profit on slump sale as per applicable accounting standards.

Human Resources:

Your Company considers its intellectual capital as its most valuable asset. Personnel policies of your Company are designated to ensure fairness to and growth of all individuals in the organization and continuously strives to provide a challenging work environment. We have a strong Performance Management System and code of conduct which reinforces our work ethics.

Due to sale of training business to its subsidiary Walchand TalentFirst Ltd, most of the staff of the company have been transferred to Walchand TalentFirst Ltd resulting in a substantial reduction in the Company’s employee strength.

4. SUBSIDIARY

The Company incorporated its wholly owned subsidiary viz WALCHAND TALENTFIRST LIMITED in the year 2007 to carry on the business of imparting talent development and management services including but not limited to training, HR consulting, job profiling, competency assessments. Due to substantial economic growth, Companies across all industrial sectors have charted out substantial expansion plans, which are linked to attracting & retaining skilled manpower. Thus the Company has aggressive plans for large-scale expansion of Training Business to tap the enormous potential. Therefore in the interests of the shareholders, the Company transferred its Training Business to a separate Subsidiary Company so as to provide undivided attention to the said business, to unlock the value of the Training Business and also enable participation from strategic / financial investors.

5. INVESTMENTS

During the year under report the outstanding position in the investment of shares and debentures of various companies were to the tune of Rs.1229.64 lacs as compared to the last year’s investment of Rs. 794.03 lacs.

The Book value of the quoted investments for the year under review was Rs. 31.59 lacs (previous year Rs. 93.60 lacs) and its market valuation was Rs. 18.45lacs (previous year Rs. 85.45 lacs).

6. FIXED DEPOSITS

Your Company had stopped accepting / renewing fixed deposits since February 1998. The Company after obtaining necessary approval from the Reserve Bank of India had offered to repay the entire fixed deposits to all the deposit holders, who were holding the deposits as on August 31, 1999, including the interest thereon.

As at March 31, 2008, there is no outstanding liability to fixed depositors. The entire outstanding liability is on account of matured fixed deposits which remained unclaimed, has been transferred to Investor Education and Protection Fund.

7. CORPORATE GOVERNANCE

Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance together with a Certificate from M/s. Pramod S. Shah & Associates - Practising Company Secretaries is annexed as part of the Annual Report.

8. COST AUDIT

The company is not required to undertake the cost audit as required under Section 233 B of the Companies Act, 1956.

9. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanation obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

a) that in the preparation of the Annual Accounts for the year ended March 31, 2008, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any.

b) that the Directors have 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 ended March 31, 2008 and of the profit of the Company for that year.

c) that the Directors have 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

d) that the Directors have prepared the Annual Accounts for the year ended March 31, 2008, on a going concern basis.

10. DIRECTORS

In accordance with the Articles of Association of the Company and provisions of the Companies Act, 1956 Mr. M.N. Bhagwat and Mr. V. K. Verma retires by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their re–appointment.

11. STATUTORY AUDITORS

You are requested to appoint Auditors for the current year and fix their remuneration. The Auditors of the Company, M/s. Haribhakti & Co., and Chartered Accountants retire at ensuing Annual General Meeting of the Company and have given their consent for re-appointment. The Company has also received a certificate from them under section 224(1B) of the Companies Act, 1956.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The provisions of Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable.

During the year under review, the Company utilized foreign exchange amounting to Rs.43.73 lacs (previous year Rs. 74.08 lacs) and earned foreign exchange amounting to Rs. Nil (Previous year Rs. 3.23 lacs)

13. PARTICULARS OF EMPLOYEES

As required under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars are set out in the annexure to this report.

For and on behalf of the Board of Directors

Date: July 31, 2008 PALLAVI JHA

Place: Mumbai CHAIRPERSON & MANAGING DIRECTOR

Registered Office:

1, Construction House,

Walchand Hirachand Marg,

Ballard Estate, Mumbai 400 001.

Statement pursuant to Section 217 (2A) of the Companies Act, 1956 and the Companies

(Particulars of Employees) Rules, 1975

Sr. No.	Name	Designation	Remuneration received (Rs.)	Qualification	Experience	Date of joining	Age	Details of previous employment		% of Equity Shares held by the Employee (As on 31.03.2008)
								Designation	Name of the Company
1	Ms. Pallavi Jha	Chairperson & Managing Director	36,76,278	MBA	18 years	01.05.1996	43 years	Executive Director	Hindustan Construction Company Limited	0.06%