##### Table of Contents

As filed with the Securities and Exchange Commission on September 30, 2010







UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F





(Mark One)



| ̈ | Registration statement pursuant to section 12(b) or (g) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------------



|x | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended March 31, 2010



| ̈ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the Transition period from  to



| ̈ | Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | -------------------------------------------------------------------------------------------

Commission File Number 001-15118





TATA
COMMUNICATIONS LIMITED

(FORMERLY KNOWN AS VIDESH SANCHAR NIGAM LIMITED)

(Exact name of Registrant as specified in its charter)





Not Applicable

(Translation of Registrants name into English)

The Republic of India

(Jurisdiction of incorporation or organization)





Sanjay Baweja

Tel No: +91-22-6657 8765

Facsimile: +91-22-6725 9029

Address: 6th floor, B Tower, Plots C21& C36, G Block,

Bandra Kurla Complex, Mumbai-400 098, INDIA

(Name, telephone, facsimile number and address of company contact person)

VSB, Mahatma Gandhi Road, Fort, Mumbai400001, INDIA

(Address of principal executive offices)





Securities
registered or to be registered pursuant to Section 12(b) of the Act:



|                                            |  |                                          
|------------------------------------------- |  | -----------------------------------------
|Title of Each Class                         |  | Name of Each Exchange on Which
Registered
|American Depositary Shares*                 |  | New York Stock Exchange                  
|Equity Shares, par value Rs. 10 per share** |  |                                          

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of class)





Indicate the number of
outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the Annual Report: 285,000,000 Equity Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.     Yes   ̈    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.     Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated
filer   ̈                Accelerated
filer  x                  Non-accelerated filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing



|           |  |                                                                                                          |  |         
|---------- |  | -------------------------------------------------------------------------------------------------------- |  | --------
|US GAAP  x |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board   ̈ |  | Other   ̈

Indicate by check mark which financial statement item the registrant has elected to
follow. Item 17   ̈    Item 18  x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x



|* | American Depositary Shares evidenced by American Depositary Receipts. Each American Depositary Share represents two Shares.
|- | ---------------------------------------------------------------------------------------------------------------------------

|** | Not for trading, but only in connection with the listing of American Depositary Shares pursuant to the requirements of the New York Stock Exchange.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------









---

##### Table of Contents

TABLE OF CONTENTS



|                                                   |  |                                                                              |  |     
|-------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | ----
|                                                   |  |                                                                              |  | Page
|CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS |  | 1                                                                           
|FORWARD-LOOKING STATEMENTS                         |  |                                                                             
|PART I                                             |  |                                                                              |  | 2   
|ITEM 1.                                            |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  | 2   
|ITEM 2.                                            |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  | 2   
|ITEM 3.                                            |  | KEY INFORMATION                                                              |  | 2   
|ITEM 4.                                            |  | INFORMATION ON THE COMPANY                                                   |  | 16  
|ITEM 4 A.                                          |  | UNRESOLVED STAFF COMMENTS                                                    |  | 33  
|ITEM 5.                                            |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  | 34  
|ITEM 6.                                            |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  | 58  
|ITEM 7.                                            |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  | 65  
|ITEM 8.                                            |  | FINANCIAL INFORMATION                                                        |  | 67  
|ITEM 9.                                            |  | THE OFFER AND LISTING                                                        |  | 71  
|ITEM 10.                                           |  | ADDITIONAL INFORMATION                                                       |  | 72  
|ITEM 11.                                           |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 91  
|ITEM 12.                                           |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 92  
|PART II                                            |  |                                                                              |  | 93  
|ITEM 13.                                           |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 93  
|ITEM 14.                                           |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 93  
|ITEM 15.                                           |  | CONTROLS AND PROCEDURES                                                      |  | 93  
|ITEM 16.                                           |  | RESERVED                                                                     |  | 94  
|ITEM 16 A.                                         |  | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  | 94  
|ITEM 16 B.                                         |  | CODE OF ETHICS                                                               |  | 94  
|ITEM 16 C.                                         |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  | 94  
|ITEM 16 D.                                         |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |  | 95  
|ITEM 16 E.                                         |  | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       |  | 95  
|ITEM 16 F.                                         |  | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                 |  | 95  
|ITEM 16 G.                                         |  | CORPORATE GOVERNANCE                                                         |  | 95  
|PART III                                           |  |                                                                              |  | 98  
|ITEM 17.                                           |  | FINANCIAL STATEMENTS                                                         |  | 98  
|ITEM 18.                                           |  | FINANCIAL STATEMENTS                                                         |  | 98  
|ITEM 19.                                           |  | EXHIBITS                                                                     |  | 99  
|SIGNATURES                                         |  | 101                                                                         
|GLOSSARY                                           |  | 102                                                                         

Explanatory Note Regarding the
Omission from this Annual Report of Certain Financial Statements Required by Rule 3-09 of Regulation S-X

In Fiscal 2010, Neotel has met
the criteria as per the definition set forth in Rule 1-02(w) of Regulation S-X, and so, pursuant to Rule 3-09 of Regulation S-X, the Company is required to include separate audited financial statements of Neotel Pty Ltd. as of and for the fiscal
year ended March 31, 2010 (Neotel Financial Statements) in this 20-F. The Neotel Financial Statements will be filed as an amendment to this 20-F as soon as it is available.



---

##### Table of Contents

CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS

In this Form 20-F, references to U.S. or the United States are to the United States of America, its territories
and its possessions. References to India are to the Republic of India. Reference to $ or Dollars or US Dollars are to the legal currency of the United States and references to Rs. or
Rupees or Indian Rupees are to the legal currency of India.

Our financial statements are presented in Indian Rupees
and are prepared in accordance with United States generally accepted accounting principles or US GAAP. In this Form 20-F, any discrepancies in any table between totals and the sums of the amounts listed are due to rounding. For the convenience of
the reader, this Form 20-F contains translations of certain Indian Rupee amounts into US Dollars, which should not be construed as a representation that such Indian Rupee or US Dollar amounts referred to herein could have been, or could be,
converted to US Dollars or Indian Rupees, as the case may be, at any particular rate, the rates stated, or at all. References to Indian GAAP are to Indian generally accepted accounting principles. References to a particular
fiscal year are to the Companys fiscal year ended March 31 of such year. References to years not specified as being fiscal years are to calendar years.

Unless the context otherwise requires, references herein to we, us, our, the Company, our
Company and Tata Communications are to Tata Communications Limited and its subsidiaries, unless it is clear from the context or expressly stated that these references are only to Tata Communications Limited.

Teleglobe and the Teleglobe logos are registered trademarks of Tata Communications (Bermuda) Limited in the United States and/or other countries. All
rights are reserved. Tata and Tata Communications are registered trademarks of Tata Sons Limited used under license by Tata Communications Ltd. and its subsidiaries worldwide. This Form 20-F refers to trade names and trademarks of other companies.
The mention of these trade names and trademarks in this Form 20-F is made with due recognition of the rights of these companies and without any intent to misappropriate those names or marks. All other trade names and trademarks appearing in this
Form 20-F are the property of their respective owners.

EXCHANGE RATES

All conversion from Indian rupees to US Dollars are based on the noon buying rate in New York City for cable transfers in foreign currencies as certified
by Federal Reserve Bank of New York for custom purposes which was Rs. 44.95 per $1.00 on March 31, 2010. Unless otherwise specified herein, financial information has been converted into US Dollars at this rate. For more information regarding
rates of exchange between Indian Rupees and US Dollars, see Item 3. Key InformationSelected Financial DataExchange Rates.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

(CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995)

This Form 20-F contains forward-looking statements (as the phrase is defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended) and information that are based on our managements current expectations, assumptions, estimates and projections about our Company and our industry and information
currently available to us. These forward-looking statements are identified by their use of terms and phrases such as anticipate, believe, could, estimate, expect, intend,
may, plan, objectives, outlook, probably, project, will, seek, target and similar terms and phrases and reflect our current views with
respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from
those described in this document.

These forward-looking statements include, among others, statements concerning:



| |  |  | our communications and information services business, its advantages and our strategy for continuing to pursue our business;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | anticipated development and the launch of new services in our business;
| | - |  | -----------------------------------------------------------------------



| |  |  | anticipated dates on which we will begin providing certain services or reach specific milestones in the development and implementation of our business
strategy;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | growth and recovery of the communications and information services industry;
| | - |  | ----------------------------------------------------------------------------



| |  |  | expectations as to our future revenue, margins, expenses and capital requirements; and
| | - |  | --------------------------------------------------------------------------------------



1



---

##### Table of Contents

| |  |  | other statements of expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

These forward-looking statements are subject to risks and uncertainties, including financial, regulatory, environmental,
industry growth and trend projections, that could cause actual events or results to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but
are not limited to, our failure to:



| |  |  | increase the volume of traffic on our network;
| | - |  | ----------------------------------------------



| |  |  | develop new products and services that meet customer demands and generate acceptable margins;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | successfully complete commercial testing of new technology and information systems to support new products and services, including voice and data
transmission services;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | stabilize or reduce the rate of price compression on certain of our communications services;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | integrate strategic acquisitions;
| | - |  | ---------------------------------



| |  |  | attract and retain qualified management and other personnel; and
| | - |  | ----------------------------------------------------------------



| |  |  | meet all of the terms and conditions of our debt obligations and other contractual obligations.
| | - |  | -----------------------------------------------------------------------------------------------

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Further
disclosures that we make on related subjects in our additional filings with the Securities and Exchange Commission (SEC) should be considered. For further information regarding the risks and uncertainties that may affect our future
results, please review the information set forth below under Item 3. Key InformationRisk Factors.

Readers are
cautioned not to place undue reliance on these forward-looking statements, which reflect managements perception and analysis only as of the date of this Form 20-F. In addition, readers should carefully review the other information in this Form
20-F and in the Companys periodic reports and other documents filed with the SEC from time to time.

PART I



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------

Selected Financial
Data

The following table sets forth our selected consolidated financial data. The consolidated financial data has been derived from, and
should be read in conjunction with, our consolidated financial statements prepared in accordance with US GAAP, along with the notes thereto. Our selected income statement data for the fiscal years ended March 31, 2008, 2009 and 2010 and
the selected balance sheet data as of March 31, 2009 and 2010 are derived from our audited financial statements and related notes included in this Form 20-F, together with the report of Deloitte Haskins & Sells, an independent
registered public accounting firm.

Our selected income statement data for the fiscal years ended March 31, 2006 and 2007 and our
selected balance sheet data as of March 31, 2006, 2007 and 2008 are derived from our audited US GAAP financial statements not included in this annual report. Our selected financial data and our financial statements are presented in Indian
rupees. Financial data as of and for the fiscal year ended March 31, 2010 has been translated into US Dollars for your convenience.



2



---

##### Table of Contents

Year ended March 31,



|                                                                     |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|-------------------------------------------------------------------- |  | --------------------- | ------- | - | ----------------- | --- | ------- | ---- |  | --- | ------- | - |  | ---- | ------- | - | ---- | --- | ------- | - |  | --- | ----- | -
|                                                                     |  | 2006                  |         |   | 2007              |     |         | 2008 |  |     | 2009    |   |  | 2010 |         |   | 2010 |    
|Income Statement Data                                                |  | (Millions of Rs.) (1) |         |   | (Millions ofUS $) |    
|Operating revenue                                                    |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|Revenues from telecommunication services                             |  |                       | 45,456  |   |                   |     | 85,977  |      |  |     | 82,331  |   |  |      | 97,295  |   |      |     | 106,080 |   |  |     | 2,360 |  
|Cost of revenues:                                                    |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|Network and transmission costs                                       |  |                       | 23,589  |   |                   |     | 51,445  |      |  |     | 46,717  |   |  |      | 51,201  |   |      |     | 61,452  |   |  |     | 1,367 |  
|License fees                                                         |  |                       | 2,003   |   |                   |     | 1,087   |      |  |     | 848     |   |  |      | 863     |   |      |     | 794     |   |  |     | 18    |  
|Total cost of revenues                                               |  |                       | 25,592  |   |                   |     | 52,532  |      |  |     | 47,565  |   |  |      | 52,064  |   |      |     | 62,246  |   |  |     | 1,385 |  
|Other operating costs:                                               |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|Depreciation and amortization                                        |  |                       | 5,249   |   |                   |     | 6,966   |      |  |     | 7,358   |   |  |      | 10,180  |   |      |     | 14,074  |   |  |     | 313   |  
|Other operating costs                                                |  |                       | 13,714  |   |                   |     | 23,037  |      |  |     | 27,200  |   |  |      | 30,394  |   |      |     | 31,323  |   |  |     | 697   |  
|Operating income/(loss)                                              |  |                       | 901     |   |                   |     | 3,442   |      |  |     | 208     |   |  |      | 4,657   |   |      |     | (1,563  | ) |  |     | (35   | )
|Non-operating income (expense), net:                                 |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|Gain on sale of investments                                          |  |                       | 77      |   |                   |     | 17      |      |  |     | 145     |   |  |      | 4,289   |   |      |     | 347     |   |  |     | 8     |  
|Interest income from income tax refunds                              |  |                       | 564     |   |                   |     | 63      |      |  |     | 167     |   |  |      |        |   |      |     | 2,183   |   |  |     | 49    |  
|Interest income from banks and others                                |  |                       | 315     |   |                   |     | 63      |      |  |     | 100     |   |  |      | 491     |   |      |     | 673     |   |  |     | 15    |  
|Interest expense                                                     |  |                       | (382    | ) |                   |     | (1,380  | )    |  |     | (1,469  | ) |  |      | (2,732  | ) |      |     | (4,188  | ) |  |     | (93   | )
|Other non-operating income, net                                      |  |                       | 1,389   |   |                   |     | 2,317   |      |  |     | 1,767   |   |  |      | 971     |   |      |     | 1,165   |   |  |     | 25    |  
|Total non-operating income (expense), net                            |  |                       | 1,963   |   |                   |     | 1,080   |      |  |     | 710     |   |  |      | 3,019   |   |      |     | 180     |   |  |     | 4     |  
|Income / (loss) before income tax                                    |  |                       | 2,864   |   |                   |     | 4,522   |      |  |     | 918     |   |  |      | 7,676   |   |      |     | (1,383  | ) |  |     | (31   | )
|Income tax (expense) / benefit                                       |  |                       | (1,932  | ) |                   |     | (2,807  | )    |  |     | (1,280  | ) |  |      | (2,430  | ) |      |     | 969     |   |  |     | 22    |  
|Dividend tax                                                         |  |                       | (240    | ) |                   |     | (180    | )    |  |     | (218    | ) |  |      | (218    | ) |      |     | (218    | ) |  |     | (5    | )
|Equity in net loss of equity method investees                        |  |                       | (70     | ) |                   |     | (96     | )    |  |     | (393    | ) |  |      | (1,120  | ) |      |     | (3,192  | ) |  |     | (71   | )
|Net Income/(loss)                                                    |  |                       | 622     |   |                   |     | 1,439   |      |  |     | (973    | ) |  |      | 3,908   |   |      |     | (3,824  | ) |  |     | (85   | )
|Net income attributable to noncontrolling interest                   |  |                       |        |   |                   |     |        |      |  |     | (1      | ) |  |      | (22     | ) |      |     | (12     | ) |  |     |      |  
|Net income / (loss) attributable to Tata Communications Limited      |  |                       | 622     |   |                   |     | 1,439   |      |  |     | (974    | ) |  |      | 3,886   |   |      |     | (3,836  | ) |  |     | (85   | )
|Basic Earnings/(Loss) per Equity Share                               |  | Rs.                   | 2.18    |   |                   | Rs. | 5.05    |      |  | Rs. | (3.42   | ) |  | Rs.  | 13.64   |   |      | Rs. | (13.46  | ) |  | US$ | (0.30 | )
|Weighted average number of Shares outstanding(2)                     |  |                       | 285     |   |                   |     | 285     |      |  |     | 285     |   |  |      | 285     |   |      |     | 285     |   |  |     | 285   |  
|Basic Earnings/(Loss) per ADS (where each ADS represents two Shares) |  | Rs.                   | 4.36    |   |                   | Rs. | 10.10   |      |  | Rs. | (6.84   | ) |  | Rs.  | 27.28   |   |      | Rs. | (26.92  | ) |  | US$ | (0.60 | )
|Dividends per share                                                  |  | Rs.                   | 6.00    |   |                   | Rs. | 4.50    |      |  | Rs. | 4.50    |   |  | Rs.  | 4.50    |   |      | Rs. | 4.50    |   |  | US$ | 0.10  |  
|Other Financial Data                                                 |  |                       |         |   |                   |     |         |      |  |     |         |   |  |      |         |   |      |     |         |   |  |     |       |  
|Net cash provided by operating activities                            |  |                       | 9,635   |   |                   |     | 6,192   |      |  |     | 10,401  |   |  |      | 14,724  |   |      |     | 14,413  |   |  |     | 321   |  
|Net cash used in investing activities                                |  |                       | (18,214 | ) |                   |     | (12,074 | )    |  |     | (16,674 | ) |  |      | (35,116 | ) |      |     | (21,604 | ) |  |     | (481  | )
|Dividends                                                            |  |                       | (1,710  | ) |                   |     | (1,283  | )    |  |     | (1,283  | ) |  |      | (1,283  | ) |      |     | (1,283  | ) |  |     | (29   | )
|Net cash (used in)/provided by financing activities                  |  |                       | 12,612  |   |                   |     | 3,806   |      |  |     | 6,738   |   |  |      | 22,548  |   |      |     | 4,186   |   |  |     | 94    |  



Notes:



|(1) | Except per share data.
|--- | ----------------------

|(2) | In millions.
|--- | ------------



3



---

##### Table of Contents

As at March 31,



|                                           |                   |         |                   |         |  |         |  |         |  |         |  |      
|------------------------------------------ | ----------------- | ------- | ----------------- | ------- |  | ------- |  | ------- |  | ------- |  | -----
|Balance Sheet Data                         |                   | 2006    |                   | 2007    |  | 2008    |  | 2009    |  | 2010    |  | 2010 
|                                           | (Millions of Rs.) |         | (Millions ofUS $)
|Total assets                               |                   | 112,477 |                   | 119,522 |  | 136,323 |  | 192,333 |  | 186,758 |  | 4,155
|Total debt                                 |                   | 19,427  |                   | 24,082  |  | 30,420  |  | 60,229  |  | 61,596  |  | 1,370
|Accounts payable                           |                   | 19,956  |                   | 18,152  |  | 22,245  |  | 34,063  |  | 30,123  |  | 670  
|Accrued expenses and other liabilities     |                   | 20,928  |                   | 24,980  |  | 32,841  |  | 45,524  |  | 47,720  |  | 1,062
|Total liabilities                          |                   | 60,311  |                   | 67,214  |  | 85,506  |  | 139,816 |  | 139,439 |  | 3,102
|Total shareholders equity                 |                   | 52,166  |                   | 52,308  |  | 50,785  |  | 52,467  |  | 47,261  |  | 1,052
|Total liabilities and shareholders equity |                   | 112,477 |                   | 119,522 |  | 136,323 |  | 192,333 |  | 186,758 |  | 4,155



Exchange Rates

Fluctuations in the
exchange rate between the Indian Rupee and the US Dollar will affect the US Dollar equivalent of the Indian Rupee price of the Companys equity shares (Shares) on the Indian stock exchanges and, as a result, will likely affect the
market price of the Companys American Depository Shares (ADS) that are listed on the New York Stock Exchange, and vice versa. Such fluctuations will also affect the US Dollar conversion by the Depository of any cash dividends paid
in Indian Rupees on the Shares represented by the ADS.

The following table sets forth, for the fiscal years indicated, information concerning
the number of Indian Rupees for which one US Dollar could be exchanged based on the foreign exchange rates certified by the Federal Reserve Bank of New York for customs purposes. The column titled Average in the table below is the
average of the certified foreign exchange rates on the last business day of each month during the year.



|                            |          |        |              |       |           |       |          |      
|--------------------------- | -------- | ------ | ------------ | ----- | --------- | ----- | -------- | -----
|Fiscal Year Ended March 31, |          | Period
|                            | End(Rs.) |        | Average(Rs.) |       | High(Rs.) |       | Low(Rs.)
|2010                        |          | 44.95  |              | 47.18 |           | 50.48 |          | 44.94
|2009                        |          | 50.87  |              | 46.32 |           | 51.96 |          | 39.73
|2008                        |          | 40.02  |              | 40.00 |           | 43.05 |          | 38.48
|2007                        |          | 43.10  |              | 45.06 |           | 46.83 |          | 42.78
|2006                        |          | 44.48  |              | 44.21 |           | 46.26 |          | 43.05

The following table sets forth the
high and low exchange rates for the previous six months and are based on the foreign exchange rates certified by Federal Reserve Bank of New York on each business day during the period:



|            |  |            |  |          
|----------- |  | ---------- |  | ---------
|Month       |  | High (Rs.) |  | Low (Rs.)
|March 2010  |  | 46.01      |  | 44.94    
|April 2010  |  | 44.79      |  | 44.10    
|May 2010    |  | 47.49      |  | 44.46    
|June 2010   |  | 47.08      |  | 45.64    
|July 2010   |  | 47.23      |  | 46.25    
|August 2010 |  | 47.02      |  | 45.70    

Capitalization and Indebtedness

Not applicable.

Reasons for
the Offer and Use of Proceeds

Not applicable.



4



---

##### Table of Contents

RISK FACTORS

In addition to the other information set forth in this document, including the matters contained under the caption Cautionary Language Concerning
Forward-Looking Statements you should carefully read the matters set forth below. The Company believes that each of these matters could materially affect our business. We recognize that most of these factors are beyond our ability to control
and therefore also to predict an outcome.

You should carefully consider the following risk factors as well as the other information contained
in this report in evaluating us and our business.

Reductions in prices for communications services in India and worldwide have had and are
expected to continue to have an adverse effect on our results of operations and financial condition.

On October 1, 2008, the Telecom
Regulatory Authority of India (TRAI) eliminated entirely (following an earlier partial reduction) the access deficit charge (ADC)a charge that had been levied historically to make up for below-cost monthly rentals and
local call services provided for fixed telephones. In addition, telecommunications tariffs in India have declined significantly in recent years as a result of increased competition. Average international call tariffs have declined from approximately
Rs. 48 (US$1.07) per minute in 2002 to approximately Rs.5 (US$0.11) per minute in 2010. Market pricing for international wholesale voice telecommunications services continues to see annual declines between 5% and 10%. We expect that the prices for
our communications services in India and worldwide will continue to decrease:



| |  |  | as we and our competitors increase transmission capacity on existing and new networks;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | as our traffic volumes increase because many of our customer agreements provide for volume-based pricing or contain other provisions for decreases in
prices;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | as a result of technological advances; and
| | - |  | ------------------------------------------



| |  |  | as a result of synergies realized through strategic acquisitions by us and our competitors.
| | - |  | -------------------------------------------------------------------------------------------

Even though the elimination of the ADC and the decline in tariffs has resulted in a traffic volume growth, they have, and are expected to continue to,
materially and adversely affect our revenues. Revenues from our wholesale voice business (which constituted 53.60% and 51.60% of our total revenue in fiscal 2010 and fiscal 2009, respectively) increased to Rs. 56, 855 million (US$1,265 million)
in fiscal 2010 from Rs. 50,207 million in fiscal 2009.

Intensifying competition in the Indian telecommunications sector may continue
to adversely affect our business.

We have faced a number of new competitors to our international long distance (ILD) business,
particularly since the Government of India (GoI) relaxed the licensing conditions and reduced the entry fees for ILD and NLD services in January 2006 (from Rs. 250 million and Rs. 1 billion, respectively, to Rs. 25 million and
Rs. 25 million, respectively). For example, Bharat Sanchar Nigam Limited (BSNL) has already begun offering its own ILD services, which has not only resulted in BSNL exchanging traffic with international carriers directly via its own
cable infrastructure, but has also resulted in a downward renegotiation of the fees we are entitled to receive from BSNL under our March 2004 infrastructure sharing agreement with BSNL and a decrease in fee-generating traffic under that agreement.
Mahanagar Telephone Nigam Limited (MTNL) procured the ILD license which may further lead to a reduction in prices. We have had to resort to steep rate cuts to remain competitive with these new market players.

There are also an increasing number of players offering various forms of data products, a business in which we have historically been a market leader.

As a result of recall of the Carrier Access Code and Carrier Pre-selection(CPS) implementation in India by the Telecom Regulatory
Authority of India (TRAI), many of our end customers do not have the right to choose to use our services, even if we offer the most competitive rates and best quality.

Until 2002, we had a monopoly on the provision of ILD services, and, until 2004, we were the exclusive provider of ILD services for BSNL and MNTL, but
since then we have had to compete for business from the access providers in the open market. Currently, access providers (including competitors such as BSNL, MTNL, Bharti, Vodafone and Reliance), which own or control the access telephone networks in
India (through which all international calls that we carry that either originate or terminate in India must pass) may choose not to use our ILD or NLD services.



5



---

##### Table of Contents

A customer choice regime for long distance calling was to have been implemented in accordance with the TRAI
directive in phases for different segments of the long distance sector, with the final implementation of CAC and CPS to be completed by December 2003. The customer choice regime has not been implemented due to technical and other reasons. This delay
is a cause for concern for the Company because it restricts the market that the Company can directly address. In an order last year, the TRAI recalled the directive requiring all service providers to implement CAC/CPS; instead the TRAI recommended
the use of calling cards as the customer choice mechanism, which the DoT has accepted. Now long distance operators can sell directly to end-customers calling cards for domestic and international long distance services. However, there is still
uncertainty around the interconnection terms and conditions.

We need to continue to increase the volume of traffic on our network or we
will not generate profits.

We must continue to increase the volume of voice, Internet, data, and video transmissions on our network both
in India and worldwide in order to realize the anticipated cash flow, operating efficiencies and cost benefits of our network, particularly since certain elements of our costs (such as repair and maintenance costs) are fixed.

Illegal international telephony operators have adversely affected our call volumes.

Illegal operators in India offer cheaper services since they do not pay license fees, taxes or the IUC or any other regulatory fees. These illegal
operators have captured a part of the incoming ILD traffic into India.

Telecommunications carriers that we do business with could suffer
from decreasing margins and financial distress, which may negatively impact our business.

Several telecommunications carriers that we do
business with have in the recent past suffered from reduced profit margins and other significant financial pressures. Some of these companies have been acquired and are undergoing restructurings of their businesses. There is no assurance that we
will continue to derive business from these carriers. Further, if any of the major carriers that we do business with encounters financial difficulties or files for bankruptcy, we may be unable to recover amounts owed to us.

Our mobile global roaming business may be adversely affected by changing technologies.

Our wireless mobile global roaming business provides roaming services for GSM, Integrated Dispatch Enhanced Network (iDEN), Universal Mobile
Telecommunications System (UMTS) and Enhanced Specialized Mobile Radio (ESMR) networks around the world. However, it may be more difficult for us to provide roaming between other networks, including networks based on third
generation (3G) Long Term Evolution (LTE) standards, because our service may not be able to work with such other networks to identify the locations and profiles of mobile subscribers. As roaming services on these other
networks become more prevalent, demand for our services may be reduced.

Our international operations and investments expose us to risks
that could materially and adversely affect our business.

We have operations and investments outside of India and the United States, as
well as rights to undersea cable capacity extending to other countries that expose us to risks inherent in international operations. These include:



| |  |  | general economic, social and political conditions;
| | - |  | --------------------------------------------------



| |  |  | difficulty in enforcing agreements and collecting receivables through certain foreign legal systems;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | tax rates in some foreign countries exceeding those in India and the U.S.;
| | - |  | --------------------------------------------------------------------------



| |  |  | fluctuations in foreign currency exchange rates;
| | - |  | ------------------------------------------------



| |  |  | withholding requirements or the imposition of tariffs, exchange controls or other restrictions on foreign earnings;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties and costs of compliance with foreign laws and regulations that impose restrictions on our investments and operations, and penalties for
noncompliance, including loss of licenses and monetary fines;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in obtaining licenses or interconnection arrangements on acceptable terms, if at all; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | changes in Indian and U.S. laws and regulations relating to foreign trade and investment.
| | - |  | -----------------------------------------------------------------------------------------



6



---

##### Table of Contents

Failure to complete development, testing and introduction of new services, including managed services,
could affect our ability to compete in the industry.

We continuously develop, test and introduce new communications services so that we
can compete for new customers and in new segments of the communications business. Sometimes the introduction of new services requires the successful upgrade or development of new technology, which may be dependent on the conclusion of contract
negotiations with vendors and vendors meeting their obligations in a timely manner. In addition, our new service offerings may not be widely accepted by our customers. If we are not able to successfully complete the development and introduction of
new services, including new managed services, in a timely manner, our business could be materially and adversely affected.

Our technical
infrastructure is vulnerable to damage, interruptions or failures which may result in reduced traffic, reduced revenues and harm to our reputation.

Our technical infrastructure is vulnerable to damage or interruptions caused by earthquakes, floods, storms, fires, power outages, war, riots, intentional
misdeeds and other similar events. In particular, a major part of our international traffic is routed through undersea cable systems as well as through cable systems between different countries. These cables are prone to damage, including cable
cuts. Any serious damage to major cables or simultaneous multiple cable failures could seriously disrupt traffic, which might lead to losses in revenue and adversely affect our reputation.

In addition, natural information technology system failures (hardware or software), human error or computer viruses may affect the quality of our
services and cause temporary service interruptions. These types of events could result in customer dissatisfaction and reduced traffic and revenues.

Our growth may depend upon our successful integration of acquired businesses.

We have made significant acquisitions in recent years and will continue to explore the possibility of future acquisitions as our business needs require.
The integration of acquired businesses involves a number of risks, including:



| |  |  | demands on management related to the significant increase in size after the acquisition;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | the diversion of managements attention from the management of daily operations to the integration of operations;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | higher integration costs than anticipated;
| | - |  | ------------------------------------------



| |  |  | failure to achieve expected synergies and costs savings;
| | - |  | --------------------------------------------------------



| |  |  | regulatory restrictions imposing a constraint on optimal designs for integration of OSS-BSS systems;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | difficulties in the assimilation of different cultures and practices, as well as in the assimilation and retention of broad and geographically
dispersed personnel and operations; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in the integration of departments, systems (including accounting systems) technologies, books and records and procedures, as well as in
maintaining uniform standards, controls (including internal control over financial reporting), procedures and policies.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our profitability may be adversely affected if we become the victim of fraud or theft of services.

The industry in which we operate has incurred losses in the last several years due to fraud. Although we have implemented various measures in order to
control losses relating to fraudulent practices, we may not succeed in effectively controlling fraud when operating in the international or domestic Indian telecommunications markets.

Our business may be adversely affected if we cannot fulfill our commitments under significant contracts.

We have entered into a number of significant contracts with certain of our wholesale voice and enterprise and carrier data customers. Failure to meet our
commitments under these contracts could result in financial losses and damage our reputation. Our five largest customers collectively accounted for 12% of our revenues in fiscal 2010 and if, due to any reason, we lose any of our major customers or
they terminate the agreement entered into with our Company, it could negatively impact our revenues as well as our profitability and cash generation ability.

Our profitability may be adversely affected if certain revenue share disputes are decided against our Company.

We are required to pay a certain percentage of our adjusted gross revenue (AGR) to the telecom licensor in India under the terms of our
license. We are involved with the licensor in a dispute resolution process under Indian telecom regulations about the definition of AGR. If the matters in dispute are decided against us, we will be required to pay a substantially higher amount that
we presently do under the license. See Item 4.



7



---

##### Table of Contents

If certain tax claims made by the Indian tax authorities against us are upheld, our financial condition
would be adversely impacted.

Over past fiscal years, the Company has made certain tax holiday and expense claims based on our
understanding of the tax laws as reinforced by legal precedent and legal advice received from external tax counsel. The Indian Tax Authority has not accepted our claims and in a few instances has levied penalties against the Company. We have
challenged the position taken by the Indian Tax Authority, which are at various stages of adjudication. If all of these disputes are decided against us, it could have an adverse financial implication of Rs. 23,463 million. For significant disputes
see Item 8.

We may not receive additional compensation from the GoI for the early termination of our monopoly on international
telephony services.

On April 1, 2002, the GoI allowed private operators to start offering ILD services, thereby terminating our
monopoly on offering such services two years ahead of schedule. The GoI compensated us with a package of benefits. The GoI had given an assurance prior to the termination of our monopoly that it would consider additional compensation if it found
this necessary following a detailed review. However, prior to the termination of our monopoly, the GoI announced that it viewed the package of benefits that it gave to us as the full and final settlement of all claims arising out of the early
termination of our ILD monopoly. We have been pursuing the GoI to consider providing us with additional compensation and in 2005 the Company filed a suit for additional compensation in the Honble Bombay High Court. On 7 July 2010, the
Honble Bombay High Court ruled that it did not have jurisdiction to entertain this suit in view of the provisions of the Telecom Regulatory Authority of India Act, 1997. The Company is considering its options including filing an appeal. There
can be no assurance that our claim will be successful or that we will receive any additional compensation from the GoI, or if we do receive compensation, as to the amount, nature or timing of such compensation.

We are subject to extensive regulation and supervision by the GoI, which could adversely affect the operation of our business and prevent us from
entering into transactions that are in the best interests of our shareholders.

We must obtain telecommunications licenses from the
Department of Telecommunications (DoT) to provide certain of our services. The DoT retains the right to modify the terms and conditions of our licenses at any time if in its opinion it is necessary or expedient to do so in the interest
of the general public or for the proper operation of the telecommunication sector. A change in certain significant terms of any of the licenses, such as their duration, the range of services permitted or the scope of exclusivity, if any, could have
a material adverse effect on our business and prospects. The DoT is empowered to revoke a license granted by it for any breach of the license conditions.

In December 2009, the DoT notified an amendment to the license condition making it mandatory to seek security clearance before placement of purchase
orders for telecom equipments/software to be used in provisioning of telecom services. This amendment and subsequent notifications insisting that the licensees provide certain undertakings/certifications may result in substantial delays in creating
capacity in our networks and in provisioning of services to customers, which may adversely affect the revenues and profitability of the Company.

We must also annually obtain various radio spectrum operating licenses from the Wireless Planning and Co-ordination Wing of the Ministry of
Communications (WPC). The non-renewal or modification of these licenses, or punitive action by the GoI for continuing these services without renewal of the licenses, could adversely affect us.

In addition, approval of the TRAI is required for all our new pricing initiatives and product launches.

Any disputes between us and the GoI regarding the terms of our telecommunications licenses, as well as any dispute between us and the other service
providers in India, is required to be adjudicated by the Telecom Disputes Settlement Appellate Tribunal (TDSAT). Failure to follow TDSAT orders may lead to the imposition of fines and other punitive actions.

Regulatory decisions and changes in the regulatory environment in the jurisdictions in which we do business could adversely affect us.

We have interests in a large number of geographic areas throughout the world and must comply with an extensive range of requirements that are meant to
regulate and supervise the licensing, construction and operation of telecommunications networks and services. These requirements are likely to increase with our overseas expansion. In particular, there are agencies which regulate and supervise the
allocation of frequency spectrum and which monitor and enforce regulation and competition laws that apply to the telecommunications industry. We cannot provide any assurances that governments in the countries in which we intend to operate will issue
or renew licenses we need on acceptable terms or at all.



8



---

##### Table of Contents

Furthermore, some of the jurisdictions where we provide services have little, if any, written regulations
governing our operations. The written regulations and guidelines that do exist in a jurisdiction may not specifically address our operations. It is possible that one or more governmental agencies will disagree with our interpretation of existing
laws or regulations and assert that our operations are not in compliance with those laws or regulations. In that event, it is possible that the governmental agency might initiate an enforcement action or impose restrictions on our operations which
could have a material adverse effect on our operations.

Debt we have incurred could affect us.

We incurred additional debt in fiscal 2010 primarily to finance our capital expenditures. As of March 31, 2010, the outstanding principal amount of
our indebtedness was Rs. 61, 596 million (US$ 1, 370 million) as opposed to Rs. 60,229 million as on March 31, 2009. We may also obtain additional long-term debt and working capital lines of credit to meet future financing needs.

The consequences on our financial condition and results of operations that could result from our debt include:



| |  |  | a limitation on our ability to obtain additional substantial debt financing;
| | - |  | ----------------------------------------------------------------------------



| |  |  | accelerated maturity of some or all of our outstanding indebtedness in the event we are unable to meet the financial covenants contained in our debt
agreements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the allocation of a portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flow available for other
purposes, such as capital expenditures, investments or dividends;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limitations on our ability to exploit lucrative large opportunities that arise in the market and are important for our growth and;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | competitive disadvantage if our competitors do not have as much debt as us.
| | - |  | ---------------------------------------------------------------------------

Termination of relationships with key suppliers could cause delays and costs.

We are dependent on key third-party suppliers for fiber, computers, software, optronics, transmission electronics and related components of our network.
We are also dependent on key suppliers to repair and maintain our extensive undersea and other cable assets. If any of these relationships is terminated or a key supplier fails to provide reliable services or equipment, we might be unable to obtain
suitable alternative arrangements quickly and consequently could experience significant delays and additional costs.

We have made, and in
the future might make, substantial capital investments in new telecommunications projects which may expose us to liquidity and execution risks.

We have made substantial additional investments in new telecommunications projects, including in connection with technology upgrades and geographic
expansion. We spent approximately Rs. 25,062 million (US$ 558 million) on capital expenditures in fiscal 2010 and we expect our capital expenditures in fiscal 2011 to be approximately Rs. 24,363 million. Our capital expenditures may increase in
the future because of cost overruns or delays in our projects or as we strive to offer new services, improve our capabilities, and remain competitive. Uncertainty in the international financial markets, including the downturn in the United States
sub-prime mortgage market and European sovereign debt crisis, may adversely affect our ability to obtain capital when needed or on terms that are attractive. Even if we are able to make all of our planned capital expenditures, telecommunications
technology evolves rapidly so there can be no assurance that any of our investments in new technology will have a positive impact on our financial results.

The absence of a robust business continuity plan could affect our business adversely.

Our operations are dependent on various information technology systems and applications which may not be adequately supported by a robust business
continuity plan, which could seriously impact our business in the event of a disaster of any nature.

It is increasingly costly for us to
comply with new and changing corporate governance and public disclosure requirements.

Changing laws, regulations and
standards relating to accounting, corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, NYSE rules, Securities and Exchange Board of India (SEBI) rules and regulations, and Indian
stock exchange listing regulations are creating uncertainty for companies like ours because they sometimes lack specificity and may be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.



9



---

##### Table of Contents

Our efforts to comply with evolving corporate governance and public disclosure laws, regulations and
standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of managements time and attention from revenue-generating activities to compliance activities. In addition, the
new laws, regulations and standards regarding corporate governance may make it more difficult for us to obtain director and officer liability insurance. Further, our board members, chief executive officer and chief financial officer could face an
increased risk of personal liability in connection with the performance of their duties.

Our business may be adversely affected by any
slowdown in economic growth in India, the United States or other countries where we conduct business or by a slowdown in the growth of the IT sector.

The growth of telecommunications traffic is related to general economic growth and slowdowns in the economy could result in slower growth rates in
telecommunications traffic. Economic slowdowns in India and the U.S. pose the greatest risk for us because approximately 27.19% and 18.06% of our operating revenues were from India and the United States, respectively, during fiscal 2010. Commencing
in 2007 and continuing into 2010, the U.S. securities markets have experienced significant deterioration and volatility and the liquidity of U.S. credit markets have substantially tightened, which has had negative repercussions on the global
economy. These developments could continue to present risks for an extended period of time for us, including a potential slowdown in our sales to customers in the financial sector. Slowdowns in the IT sector might adversely affect our revenues as
well, because the IT sector is a major contributor to our telephony and leased channel revenues.

A substantial portion of our assets are
located in India and our equity is listed on the Indian stock exchanges. Accordingly, our performance and the market price and liquidity of our equity may be affected by changes in exchange rates and controls, interest rates, government policy,
taxation and other political, economic or social developments in or affecting India.

Since 1991, successive governments in India have
pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the GoI and state governments in the Indian economy as producers, consumers and regulators remains
significant in ways that affect all Indian companies, including us.

Political instability could result in changes in policy, delay reforms of
the Indian economy and could have a material adverse effect on the market for securities of Indian companies, including the Shares, and consequently the ADSs.

Terrorist attacks and other acts of violence or war involving India, the United States and other countries could adversely affect the financial
markets and our business.

Terrorist attacks and other acts of violence or war may negatively affect the Indian markets where the Shares
trade and adversely affect the worldwide financial markets. These acts may also result in a loss of business confidence and make travel more difficult.

Also, as a result of such events, India, the United States or certain other countries where our Company has or may have major business interests may
enter into armed conflict with other countries. The consequences of any potential armed conflicts are unpredictable. In addition, India has from time to time experienced unrest relating to religious and political differences within Indias
population, as well as with its neighboring country Pakistan.

Any increase in regional or international hostilities, terrorist attacks or
other acts of violence or war could have a significant adverse impact on international and Indian financial markets or economic conditions or on the GoIs policy, thereby disrupting communications. Such political tensions could create a greater
perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact on our business, or the market price of the Shares and ADSs.

Conditions in the Indian securities markets may affect the price or liquidity of the Shares and ADSs.

The Indian securities markets are smaller in terms of trading volume and more volatile than the securities markets in the United States and certain
European and other countries. The Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. It is generally perceived that there is a lower level of regulation and monitoring of the Indian
securities markets and the activities of investors, brokers and other market participants than in securities markets in the United States and certain European and other countries.

The Indian stock exchanges have experienced trading interruptions in the past because of regulatory interventions and operational issues. If these
interruptions were to recur, it could affect the market price and liquidity of the securities of Indian companies, including the Shares and ADSs. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed
restrictions on trading in certain securities, limitations on price movements and margin requirements. Similar problems could occur in the future and, if they do, it could affect the market price and liquidity of the Shares and ADSs.



10



---

##### Table of Contents

We and you may be subject to potential losses arising out of risks associated with the conversion rates
between the functional currency of the Company and other foreign currencies.

Fluctuations in the exchange rate between the Indian rupee
and the U.S. dollar will affect the U.S. dollar equivalent of the Indian rupee price of equity shares on the Indian stock exchanges and, as a result, the prices of our ADSs in the United States, as well as the U.S. dollar value of the proceeds a
holder would receive upon the sale in India of any equity shares withdrawn from the Depositary under the Depositary Agreement will be impacted. Such fluctuations will also affect the Dollar equivalent of any cash dividends in Rupees received on the
Shares represented by the ADSs and the Dollar equivalent of the proceeds in Rupees of a sale of the Shares in India.

Fluctuations in the
exchange rates affect the respective functional currency amount of foreign currency settlements received by the Company from and paid by the Company to foreign telecommunication administrations, and payments for imported equipments and technology
and on account of foreign currency borrowings.

You may not be able to enforce a judgment of a foreign court against us.

We are organized under the laws of India. All of our directors and officers are Indian nationals and all or a significant portion of the assets of all of
the directors and officers and a substantial portion of our assets are located in India. As a result, it may be difficult for investors to effect service of process on us or such directors or officers outside India or to enforce judgments against
them obtained from courts outside India, including judgments predicated on the civil liability provisions of the United States federal securities laws.

Dealings with telecommunication service providers in countries designated by the U.S. Department of State as state sponsors of terrorism may lead some
potential customers and investors in the U.S. and other countries to avoid doing business with us.

The United States, and from time to
time other countries, have laws that may prohibit or restrict their citizens from engaging in business in certain countries, or that otherwise impose economic sanctions on such countries. International bodies such as the United Nations may also
impose sanctions on certain countries from time to time. The United States currently has laws that prohibit or restrict its citizens from doing business in Cuba, Iran, the Sudan and Syria.

As a major provider of international telecommunications services to customers in India, we enter into interconnection agreements with communications
providers around the world. We have entered into agreements with providers located in certain of such countries, and entered into arrangements to facilitate the carrying of telecommunications traffic to and from such countries, and we may do so in
the future.

We are substantially owned by some of the Tata Group companies and the GoI who have significant rights in relation to the
election of our board of directors and may have interests which conflict with those of our other shareholders, including holders of the ADSs.

As of March 31, 2010, 50.03% of our outstanding equity was held by Panatone Finvest Limited and other Tata group companies, and 26.12% was held by
the GoI. Panatone Finvest Limited, certain other Tata group companies and the GoI are parties to a Shareholders Agreement (the SHA) pursuant to which they have agreed on certain matters with respect to our governance and operation,
including the composition and election of our board of directors. As a result of their equity holdings and the SHA, Panatone Finvest Limited and the GoI together control all matters submitted to shareholders, including the election of directors.
They also have significant control over the matters that come up for consideration at the meetings of our board of directors. There can be no assurance that the interests of Panatone Finvest Limited and the GoI will not differ from the interests of
our other shareholders, including the holders of ADSs.

Future sales by the GoI of our shares may adversely affect our share price.

As of March 31, 2010, the GoIs stake in our Company was 26.12%. If or when the GoI decides to reduce its stake in our Company, the
manner in which the GoI decides to reduce its stake and the selection of the buyer of such stake, may have an adverse impact on the price of the Shares.

We may face potential conflicts of interest relating to our principal shareholder.

Our principal shareholder is part of the Tata group of companies which have diverse business activities and interests. The Tata group or their affiliates
could engage in activities, or seek opportunities, that are or could be in competition with our activities or interests. In particular, the Tata group has interests in other companies in the telecommunications sector, such as Tata Teleservices
Limited.



11



---

##### Table of Contents

Disagreements between the Tata group of companies and the GoI concerning our activities could result in a
deadlock, which could adversely affect our business.

Panatone Finvest Limited, certain other Tata group companies and the GoI have agreed
in the SHA that we shall not undertake certain corporate actions unless at least one director nominated by each of them (in the case of a board meeting) or at least one authorized representative nominated by each of them (in the case of a
shareholder meeting) consents to such action. Panatone Finvest Limited, the other Tata group companies and the GoI have also agreed not to transfer their shares in our Company without giving the other certain rights of first refusal and tag-along
rights. In the event that Panatone Finvest Limited, the other Tata group companies and the GoI fail to agree on any such matter, their disagreement could result in us not taking advantage of a potential opportunity. Further, any disagreement in
relation to raising funds through non-debt sources could result in an inability to implement our capital expenditure plans efficiently.

The demerger of surplus land held by us may not be completed on satisfactory terms.

Under the terms of the SHA, Panatone Finvest Limited agreed to cause us to demerge certain land that we own but were not actively using into a separate
company. No time period was specified in the agreement for such demerger. We, Panatone Finvest Limited and the GoI are currently discussing various options in connection with the demerger. Until such time as the demerger takes place, the lands are
under our possession and upkeep. We cannot predict if the demerger will take place or the expenditure that we might have to incur for the security, upkeep and maintenance of the surplus land. Further, we may have to bear significant costs, including
taxes and duties, relating to the demerger, and we cannot predict what effect, if any, the demerger and the legal and valuation process relating to the demerger will have on our financial condition.

Holders of ADSs have no voting rights.

Investors in ADSs have no voting rights, unlike holders of Shares. It is contemplated that the Bank of New York Mellon, as depositary for the ADSs (the
Depositary) will exercise its right to vote the Shares represented by ADSs as directed by our board of directors. Investors may withdraw the Shares underlying the ADSs and seek to vote the Shares obtained from the withdrawal. However,
for foreign investors, this withdrawal process may be subject to delays.

There is a limited market for the ADSs.

Even though the ADSs are listed on the New York Stock Exchange, there is no assurance that any trading market for the ADSs will be sustained. Subsequent
to the open/tender offer by Panatone Finvest Limited, the number of shares represented by ADSs declined from approximately 60 million (representing 21% of the issued and outstanding Shares) as of March 31, 2002 to approximately
21 million (representing 7.48% of the issued and outstanding Shares) as of March 31, 2010. This may affect the liquidity of the market for the ADSs and the price at which they trade.

Indian law imposes foreign investment restrictions that limit a holders ability to convert equity shares into ADSs, which may cause the Shares
to trade at a discount or premium relative to the market price of the ADSs.

Although the GoI permits two-way fungibility of ADSs, this is
still subject to sectoral caps under regulations governing foreign direct investment (FDI) in India, compliance with the provisions of the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme 1993, periodic guidelines issued by the GoI and registration requirements in the United States. Such restrictions on foreign ownership of the underlying equity shares may cause the Shares to trade at a discount or premium to the
ADSs.

An investor in the ADSs may not be able to exercise preemptive rights for additional Shares and may thereby suffer dilution of his
or her equity interest in us.

A company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and
pay for a proportionate number of shares to maintain their existing ownership percentage prior to the issuance of any new equity shares, unless such preemptive rights have been waived by three-fourths of the shares voting on the resolution. Holders
of ADSs may be unable to exercise preemptive rights for equity shares underlying ADSs unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the
Securities Act is available. We are not obliged to prepare and file such a registration statement and our decision on whether to do so will depend on the costs and potential benefits of enabling the holders of ADSs to exercise their preemptive
rights, and any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the
depositary, which may sell such securities for the benefit of the holders of the ADSs. There can be no assurance as to the value, if any, that the Depositary would receive upon the sale of such securities. To the extent that holders of ADSs are
unable to exercise preemptive rights granted in respect of the shares represented by their ADSs, their proportional interests in us would be reduced.



12



---

##### Table of Contents

Intellectual property and proprietary rights of others could prevent us from using necessary technology
to provide our services.

If technology that is necessary for us to provide our services is held under patent by another person, we would
have to negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable. The existence of such patents, or our inability to negotiate a license for any such technology on acceptable
terms, could force us to cease using the technology and offering products and services incorporating the technology.

To the extent that we
are subject to litigation regarding the ownership of our intellectual property, this litigation could:



| |  |  | be time-consuming and expensive;
| | - |  | --------------------------------



| |  |  | divert attention and resources away from our daily business;
| | - |  | ------------------------------------------------------------



| |  |  | impede or prevent delivery of our products and services; and
| | - |  | ------------------------------------------------------------



| |  |  | require us to pay significant royalties, licensing fees and damages.
| | - |  | --------------------------------------------------------------------

Parties making claims of infringement may be able to obtain injunctive or other equitable relief that could effectively block our ability to provide our
services and could cause us to pay substantial damages. In the event of a successful claim of infringement, we may need to obtain one or more licenses from third parties, which may not be available at a reasonable cost, if at all. The defense of any
lawsuit could result in time-consuming and expensive litigation, regardless of the merits of such claims, and could also result in damages, license fees, royalty payments and restrictions on our ability to provide our services, any of which could
harm our business.

Impairment of our intellectual property rights could harm our business.

Our efforts to protect our intellectual property rights through patent, copyright, trademark and trade secret laws in various jurisdictions worldwide may
not prevent misappropriation, and our failure to protect our proprietary rights could materially adversely affect our business, financial condition and operating results.

A third party could, without authorization, copy or otherwise appropriate our proprietary network information. Our agreements with employees and others
who participate in development activities could be breached, we may not have adequate remedies for any breach, and our trade secrets may otherwise become known or independently developed by competitors.

We may be unable to hire and retain sufficient qualified personnel; the loss of any of our key executive officers could adversely affect our business.

We believe that our success in the future will depend to a large extent on our ability to attract and retain highly skilled,
knowledgeable, sophisticated and qualified managerial, professional and technical personnel. We expect to experience significant competition in attracting and retaining personnel who possess the skills that we are seeking. Our business is managed by
a team of key executive officers and their immediate teams. Loss of any of these key executives could have a material adverse effect on our business.

Our operations and profitability may be adversely affected if the funding required for the plans is delayed.

The Company is dependent on its promoter shareholders i.e. the Strategic Partner and the Government of India, agreeing to the proposals for raising
non-debt funds such as subscription to the new shares or monetization of certain assets. This dependency arises in view of the provisions of the Share Purchase Agreement (SPA) among the Strategic Partner, the Government of India and the
Company and the provisions of the Articles of Association of the Company. If the promoter shareholders do not agree to such proposals for any reason, the Company may not be able to implement its capital expenditure plans efficiently and, as a
result, its operations and profitability may be adversely affected.

Currency and exchange rate fluctuations could adversely affect our
results of operations.

The functional currency of Tata Communications India and its Indian subsidiaries is the Indian Rupee, whereas the
functional currency of TCIPL and its subsidiaries, TCSAI and VSNL SNOSPV Pte Ltd. is the United States Dollar and that of all other subsidiaries, the currency in the country of incorporation. We incur network and other expenses and sell our
products/services in various countries outside India. Moreover, we have outstanding foreign currency denominated debt and hence we are sensitive to fluctuations in foreign currency exchange rates. Adverse changes in exchange rates may have a
material adverse effect on our revenues, other income, and cost of services sold, gross margin and net income, and hence may have an impact on our business, operating results and financial condition.



13



---

##### Table of Contents

Also we expect that a majority of our transactions, both revenue and a significant portion of our expenses,
including personnel costs, as well as capital and operating expenditures, will continue to be in foreign currencies, including the U.S. dollar, the Great Britain Pound, the Euro and the Canadian dollar, for the foreseeable future. Consequently, we
expect to continue to experience foreign exchange losses and gains on obligations denominated in foreign currencies in respect of our borrowings and foreign currency assets and liabilities due to currency fluctuations in the future as well.

We use derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in foreign
exchange rates on accounts receivable and payables and loan to International Subsidiaries from India denominated in foreign currencies. These derivative financial instruments may not be able to offset in full the foreign exchange losses, if any.

Additionally, our hedging activities may also result in losses due to volatility in foreign currency markets and timing of hedging activity.
Such fluctuations in foreign currency exchange rates may have an impact on our business, operating results and financial condition.

The
U.S. financial markets have experienced significant deterioration and volatility recently, which has had negative repercussions on the global economy and, as a result, could present new challenges for our business.

Commencing in 2007 and continuing into 2010, certain adverse financial developments have impacted the U.S. and global financial markets. These
developments include a general slowing of economic growth both in the U.S. and globally, substantial volatility in equity securities markets, and volatility and tightening of liquidity in credit markets. While it is difficult to predict how long
these conditions will exist and which markets and businesses of our company may be affected, these developments could continue to present risks for an extended period of time for our company, including a potential slowdown in our sales to customers
in the financial sector.

As the economy continues to worsen, our profitability may be adversely impacted by an increase in bad debts.

The Company sells to a large number of customers, across many countries, ranging from government backed agencies and large wholesalers to
enterprises. An economic slowdown may impact the ability of some of these customers to continue to trade, which in turn may result in losses from writing these debts off. Although risk management processes are in place to manage this risk, and
provisions are established for debts that may not be recoverable we cannot be certain that there will not be further losses above those already provided for.

Our operations and profitability may be adversely affected by decisions taken by revenue authorities in various jurisdictions in which we operate
which are beyond our control.

The integrated nature of our worldwide operations can produce conflicting claims from revenue authorities as
to the profits to be taxed in individual territories. The resolution of these disputes can result in a reallocation of profits between jurisdictions and an increase or decrease in related tax costs, and has the potential to affect our cash
flows and earnings per share. Claims, regardless of their merits or their outcome, are costly, divert management attention, and may adversely affect our reputation.

The majority of the jurisdictions in which we operate have double tax treaties with other foreign jurisdictions, which enable us to ensure that our
revenues and capital gains do not incur a double tax charge. If any of these double tax treaties should be withdrawn or amended, especially in a territory where a member of the Company is involved in a taxation dispute with a tax authority in
relation to cross-border transactions, such withdrawal or amendment could have a materially adverse effect on our financial condition and results of operations, as could a negative outcome of a tax dispute or failure of tax authorities to agree
through competent authority proceedings.

Emerging markets are an important part of our business plans. As we continue to develop our
business in emerging markets, we may face challenges unique to emerging markets that could adversely impact our operations and / or profitability.

The development of our business in emerging markets may be a critical factor in determining our future ability to sustain or increase the level of our
global revenues. Challenges that arise in relation to the development of the business in emerging markets include, but are not limited to, more volatile economic conditions, competition from companies that are already present in the market, the need
to identify correctly and leverage appropriate opportunities for sales and marketing, poor protection of intellectual property, inadequate protection against crime (including counterfeiting, corruption and fraud), inadvertent breaches of
local law/regulation and not being able to recruit sufficient personnel with appropriate skills and experience. The failure to exploit potential opportunities appropriately in emerging markets may have a materially adverse effect on our financial
condition and results of operations.



14



---

##### Table of Contents

Acquisitions and strategic alliances formed as part of our externalisation strategy may be unsuccessful.

We seek acquisitions of complementary businesses, technology licensing arrangements, strategic alliances and collaborations to expand our
product portfolio and geographical presence as part of our business strategy. Examples of such recent strategic acquisitions, arrangements, collaborations and alliances include:



| |  |  | Acquisition of BTs Mosaic business to accelerate our Media and Entertainment capability.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Collaboration with BIX, Etisalat, Mobily, Nawras and Qtel to construct, operate and maintain the TGN-Gulf undersea cable system which will connect
Mumbai with Bahrain, Oman, Qatar, Saudi Arabia and UAE;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Collaboration with Mobily to construct, operate and maintain a branch on the TGN-Eurasia undersea cable system to connect Saudi Arabia with Mumbai and
Marseille, France;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Telepresence inter-connection agreement with British Telecom and Telefonica to enable inter-carrier Telepresence sessions between each companys
respective customers; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Collaboration with Starwood Hotels, American Express Travel, Carlson Wagonlit Travel and Sabre to offer public Telepresence room services to corporate
customers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Agreement with BitGravity Inc. for the development of CDN technology.
| | - |  | ---------------------------------------------------------------------

We may not complete these types of transactions or collaborative projects in a timely manner, on a cost-effective basis, or at all, and
may not realise the expected benefits of any acquisition, licensing arrangement or strategic alliance. Other companies may also compete with us for these opportunities. The success of such current and future arrangements is largely dependent on the
technology and other intellectual property we acquire and the resources, efforts and skills of our partners. Disputes and difficulties in such relationships may arise, often due to conflicting priorities or conflicts of interest which may erode
or eliminate the benefits of these alliances if, for example, the agreements are terminated; insufficient financial or other resources are made available to the alliances; intellectual property is negatively impacted; obligations are not
performed as expected; controls and commercial limitations are imposed over the marketing and promotion of products to be co-developed; or challenges in achieving commercial success of the product are encountered during the development process.
Also, under many of our strategic alliances, we make milestone payments well in advance of commissioning of the cable system, with no assurance that we will ever recoup those payments. If these types of transactions are unsuccessful, this may have
an adverse effect on our financial condition and results of operations.

In addition, integration of an acquired business could involve
incurring significant debt and unknown or contingent liabilities, as well as have a negative effect on our reported results of operations from acquisition-related charges, amortisation of expenses related to intangibles and charges
for impairment of long-term assets. These effects, individually or in combination, could cause a deterioration of our credit rating, increased borrowing costs and interest expense.

Our increasing reliance on outsourced personnel to develop and maintain our internal IT infrastructure could, if not properly managed, result in a
disruption of critical internal services and as a result, adversely affect our operations

We are dependent on effective information
technology (IT) systems. These systems support key business functions such as our R&D and billing capabilities, and are an important means of internal communication and communication with customers and suppliers. Any significant disruption
of these IT systems or the failure of new IT systems to integrate with existing IT systems could materially and adversely affect our operations. We also have a number of outsourcing arrangements in respect of critical processes, services and
the support of our IT infrastructure and our increasing dependency on these outsource providers could impact on our ability to deliver on business targets and to maintain our compliance status and reputation. Risk associated with outsource
providers is mitigated by our contracting approach which enables us to monitor closely any degradation in services and enact staged remedies.

The Company is engaged in continuous productivity initiatives aimed at making the Company more profitable and its operations more efficient. Failure
of one or all of these initiatives or mismanagement of the same may have a material adverse affect on our operations and/or profitability.

We are implementing various productivity initiatives and restructuring programmes, with the aim of enhancing the long-term efficiency of the business.
However, the anticipated cost savings and other benefits are based on preliminary estimates and the actual savings may vary significantly. In particular, these cost reduction measures are based on current conditions and do not take into account
any future changes to the communications industry or our operations, including new business developments, wage and price increases and other factors. If inappropriately managed the expected value of the initiative can be lost through low
employee morale and hence productivity, increased absence levels and industrial action. Our failure to implement successfully these planned cost reduction measures, either through the successful conclusion of employee relations processes (including
consultation and engagement, talent management and recruitment and retention), or the possibility that these efforts do not generate the level of cost savings we anticipate, could have a materially adverse effect on our financial condition,
results of operations and reputation.



15



---

##### Table of Contents

Our operations and/or profitability could be adversely affected by the increase in environmental
legislation worldwide which may result in an increase in our cost of compliance.

We integrate core values of environmental protection into
our business strategy to add value to the business, manage risk and enhance our reputation. We are subject to laws and regulations concerning the environment, safety matters, regulation of product safety in the countries where we sell our products
and/or services or otherwise operate our business. These requirements include regulation of the handling, transportation, use and disposal of materials used in our business, including the discharge of pollutants into the environment. In the normal
course of our business, we are exposed to risks relating to (i) possible releases of hazardous substances (such as fuel from our storage tanks or acid from battery accumulators) into the environment which could cause environmental or property damage
or personal injuries, and which could require remediation of contaminated soil and groundwater and (ii) possible damage due to the removal of certain decommissioned submarine fibre optic cables which could require remediation and/or rectification.
Under certain laws, we may be required to remediate contamination at third party sites, or at certain of our properties regardless of whether the contamination was caused by us, or by previous occupants of the property.

An increasing amount of intangible assets and goodwill on our books may lead to significant impairment charges in the future.

The amount of goodwill and other intangible assets on our consolidated balance sheet amounts to 5% of the Companys total assets. Although no
significant impairments are currently anticipated, any future diminution in the enterprise value of the reporting business unit may lead to material impairment charges. We regularly review our long-lived intangible and tangible assets, including
identifiable intangible assets, investments in associated companies and goodwill, for impairment. Goodwill is subject to impairment review at least annually. Other long-lived assets are reviewed for impairment atleast annually or when there is an
indication that an impairment may have occurred. Any significant impairment charges could have a material adverse effect on our results of operations. For a detailed discussion of how we determine whether an impairment has occurred, what factors
could result in an impairment and the increasing impact of impairment charges on our results of operations, see Item 5 Operating ResultsCritical Accounting Policies Impairment of Long-Lived Assets and Valuation of Goodwill
and Item 18 Financial Statements.



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

Tata
Communications Limited, formerly known as Videsh Sanchar Nigam Limited, is a leading global provider of a new world of communications. With a leadership position in emerging markets, Tata Communications leverages its advanced solutions capabilities
and domain expertise across its global and pan-India network to deliver managed solutions to multi-national enterprises, service providers and Indian consumers.

The Tata Global Network includes one of the most advanced and largest submarine cable networks, a Tier-1 IP network, with connectivity to more than 200
countries across 400 PoPs, and nearly 1 million square feet of data center and colocation space worldwide. Incorporated in 1986, the Company has quickly become a significant global player in the highly competitive telecommunications industry.
Over the past several years, the Company has restructured itself from a pure long distance service provider in India to one of the leading integrated communications solutions providers globally. The Company has transformed itself into a global
player through a series of organic as well as inorganic growth strategies, while maintaining its focus on wholesale voice services.

Today,
the Company is one of the worlds largest providers of wholesale international voice services and operates one of the largest global submarine cable networks in the world. The Companys customer base includes approximately 1,600 global
carriers and service providers, 785 mobile operators, 10,000 enterprises, 275,000 broadband and internet subscribers and 500 Wi-Fi public hotspots. The Companys global transmission network of over 210,000 route kilometers and its IP core with
over 400 points of presence, enable a range of services that include traditional TDM voice, VOIP, private leased circuits, IP VPN, Internet access, global Ethernet, data centre, co-location, managed network, managed services, managed hosting,
managed storage, mobile signaling and other IP-related services.

The Companys Internet website address is
http://www.tatacommunications.com. Information on the Companys website is not incorporated into and should not be considered a part of this document. The Companys registered office is at VSB, Mahatma Gandhi Road, Fort, Mumbai 400
001, India (and its telephone number is +91-22-6657 8765). The process agent for the Companys ADR facility is State Bank of India, New York office, 460 Park Avenue, New York, 10022.



16



---

##### Table of Contents

History and Development of the Company

The Company was incorporated on March 19, 1986 as a limited liability company under the Indian Companies Act. On April 1, 1986, the Company
assumed control and management of all of the assets, employees and operations of the Overseas Communications Service, a department of the Ministry of Communications of the Government of India. The Company was wholly owned by the Government of India
until 1992 at which time the Government of India sold 12 million shares it owned in the Company to various financial institutions in India. During 1997 and 1999, the Government also sold some of its equity holdings in the Company through the
issuance of global depositary receipts (GDRs).These GDRs were converted into ADRs (also referred to herein as American Depository Shares or ADS) upon the Companys listing on the New York Stock Exchange on August 15, 2000.

In February 2002, through a competitive bidding process, the Government of India selected Panatone Finvest Ltd., a Tata Group company, as the
strategic partner for the sale and purchase of 25% of the then outstanding voting capital of the Company from the Government of India. By virtue of this transaction, the Government of Indias holdings in the Company were reduced to 27.97% and
the Company ceased to be a Government of India enterprise. Other Tata companies have since made open market purchases of the Companys equity shares, and the consolidated shareholding of the Tata companies in the Company as of March 31,
2010 was approximately 50.03% and that of the Government of India was approximately 26.12%.

On March 31, 2002, the Companys
monopoly in International Long Distance (ILD) in India terminated pursuant to a notice of early termination issued by the Government of India. With effect from April 2002, the Government of India began to license new operators to provide
international telephone services, who now compete with the Company in India.

In recent years, the Company has made a number of acquisitions.
They include:



| |  |  | In February 2005, the South African government selected the Company as a strategic investor in the countrys proposed second national
telecommunications operator (Neotel). The Company through a wholly owned subsidiary incorporated in Singapore acquired 43.16% of SEPCO Communications Pty. Ltd (SEPCO), a company incorporated in South Africa which in turn owns 51% in Neotel. Neotel
launched services on August 31, 2006. In January 2009, the Company through the same wholly owned subsidiary in Singapore acquired an additional 27% stake directly in Neotel.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On February 13, 2006, the Company acquired Teleglobe International Holdings Limited (Teleglobe). Teleglobe provided international
voice, data, and value-added services comprised mainly of mobile global roaming and signaling services.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On February 28, 2006, the Company purchased the ISP business of Seven Star Dot Com Pvt. Ltd. (Seven Star). Seven Star has strengthened
the Companys last-mile access for Internet broadband services in high potential areas of Mumbai, India.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In June 2006, the Company acquired Direct Internet Limited (DIL) and its wholly-owned subsidiary, Primus Telecommunications India Limited,
now known as Tata Communications Internet Services Limited.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In May 2008, the Company entered into a CDN Partnership Agreement with BitGravity, Inc. to establish a revenue share arrangement with
BitGravity. BitGravity has built a next generation CDN technology for the broadcasting industry and large file download applications, which is optimized to deliver HD-quality video on demand, live broadcasts, gaming downloads and applications
for the Internet. The Company has installed a CDN platform in Europe, Asia, India and North America (a total of 17 CDN nodes) which are owned and operated by the Company but equipped with BitGravity CDN technology. In August 2008, the
Company invested $11.5 million in convertible debt issued by BitGravity Inc. On December 14, 2009, the Company acquired equity shares in BitGravity Inc. representing an equity interest of 22.86% for consideration of approximately $1.4 million.
On September 19, 2010, the Company acquired another 22.86% of the outstanding equity shares of BitGravity Inc for approximately $1.4 million.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On January 16, 2010, the Company through its UK subsidiary, Tata Communications (UK) Ltd., completed its purchase of the business and assets of
the Cosmos business of British Telecommunications PLC (BT Mosaic) for cash consideration of $3.2 million. BT Mosaic offers an on-demand digital media management platform that manages content and workflow from production to distribution
across collaborative market ecosystems (the Services), and provides equipment and professional services exclusively relating to the Services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During fiscal 2008, the Company changed its name from VSNL to Tata Communications Limited. In fiscal 2008, the Company also signed a Brand Equity and
Business Promotion Agreement (the BEBP Agreement) with Tata Sons Limited, the owners of the intellectual property rights for the brand and corporate name Tata. On 13 February 2008, the Company launched its new identity
and brand name worldwide, integrating the former VSNL, VSNL International, Teleglobe and CIPRIS brands. In February 2010, 33 subsidiaries of Tata Communications Limited entered into the BEBP Agreement with Tata Sons Limited. The Company and its
various wholly-owned subsidiaries world-wide operate under the single unified brand name of Tata Communications.



17



---

##### Table of Contents

Business Strategy

The Companys vision is to deliver a new world of communications to advance the reach and leadership of its customers. Its strategy is to build
leading-edge IP-leveraged solutions advanced by its unmatched global infrastructure and leadership position in India and other markets where it competes. To this end, the Company provides a differentiated choice to retail, service provider and
enterprise customers. That differentiated choice offers a growing range of services utilizing Internet protocol and other leading edge technologies and world class managed service offerings in established, emerging and underserved markets.

Adapting Business Model to a Changing Environment

The international wholesale voice industry is in a major transition as voice traffic is shifting from traditional carriers (fixed-line operators) to
emerging mobile, web telephony and ISP/broadband operators. The shift in ownership of end-user subscribers is coincident with a technology shift from a minutes-based unit model to a multi-media session. As the industry continues to consolidate,
wholesale traffic is expected to grow with a renewed focus on customer support and quality of service. The Company is therefore focused on continued automation of much of its transactional systems and processes to better support the wholesale
business, and restructuring the organization to better penetrate those segments expected to experience the highest growth rate in the coming years (mobile, web telephony, ISP/broadband operators).

In June 2009, the Company through its wholly-owned indirect subsidiary, Tata Communications (UK) Ltd., entered into a major global voice strategic
agreement with the British Telecom Plc. The five-year agreement allows Tata Communications and BT to mutually benefit from shared resources as part of a global supply arrangement. Under the terms of the agreement, the Company became BTs
exclusive supplier of International Direct Dial (IDD) outside BTs own footprint countries (excluding some specific key accounts) and BT became Tata Communications IDD sales channel for its non-major and non-strategic accounts in the UK.
This sales channel could be expanded into a few other European countries if BT achieves pre-established targets in the UK. This agreement represented approximately 6 billion minutes per year that the Company is managing on behalf of BT representing
approximately a 20% increase of the Companys voice traffic volumes in fiscal 2009.

Continuing Leadership in India

Currently, the Company has leading market shares in voice and data transmission in India. In wholesale voice, the Company commands a
52.5% market share in the ILD segment. In enterprise data services, the Company is the market leader with an over 20% market share.

On the
consumer side, the Company has integrated its retail consumer offerings in India under a single package which provides access agnostic internet services along with a variety of internet enabled content and applications.

Differentiated Enterprise Offerings

The Company intends to strengthen its position in network services and has recently introduced new products and services catering to the needs of
corporate customers, such as corporate Internet telephony, bandwidth-on-demand and hosted contact centers. Additionally, the Company recently launched new services such as the telepresence virtual meeting room, content delivery networks, managed
hosting and storage, managed messaging, managed security and other managed products and services.

Growth in Managed
Services

The Company has introduced a number of Managed Services as part of its offerings to enterprise customers on a global basis.
Revenue from Managed Services has grown 30% in fiscal 2010 as against fiscal 2009. These services include:



| |  |  | IT Infrastructure Services
| | - |  | --------------------------



| |  |  | Colocation Services
| | - |  | -------------------



| |  |  | Managed Hosting Services
| | - |  | ------------------------



| |  |  | Managed Storage Services
| | - |  | ------------------------



| |  |  | Security Services
| | - |  | -----------------



| |  |  | CPE-Based Services
| | - |  | ------------------



| |  |  | Cloud-Based Services
| | - |  | --------------------



| |  |  | Professional Services
| | - |  | ---------------------



18



---

##### Table of Contents

| |  |  | Application Services
| | - |  | --------------------



| |  |  | Collaboration Services
| | - |  | ----------------------



| |  |  | Conferencing and Messaging Services
| | - |  | -----------------------------------



| |  |  | Telepresence
| | - |  | ------------



| |  |  | Hosted Contact Center Services
| | - |  | ------------------------------

Strategic overseas expansion, greenfield ventures and acquisitions

The Company believes that its leading Indian market position, growing service offerings and deployment of leading-edge technologies together give it
competitive advantages in emerging and underserved markets. With our global legacy-free infrastructure and on-the-ground presence in key markets, the Company aims to leverage its advanced solutions capabilities and domain expertise across its global
and pan-India network to deliver managed solutions to multi-national enterprises, service providers and Indian consumers.

The following is a
breakdown of the Companys revenues by geography:



|                            |  |                |        |                |     |                |  |     |         |  |     |      
|--------------------------- |  | -------------- | ------ | -------------- | --- | -------------- |  | --- | ------- |  | --- | -----
|For the fiscal years ended: |  | March 31, 2008 |        | March 31, 2009 |     | March 31, 2010
|                            |  | (In millions) 
|India                       |  | Rs.            | 35,448 |                | Rs. | 31,984         |  | Rs. | 28,847  |  | US$ | 642  
|United States Of America    |  |                | 17,817 |                |     | 16,683         |  |     | 19,159  |  |     | 426  
|United Kingdom              |  |                | 5,306  |                |     | 6,791          |  |     | 11,637  |  |     | 259  
|Canada                      |  |                | 4,349  |                |     | 3,976          |  |     | 4,274   |  |     | 95   
|Rest of the world           |  |                | 19,411 |                |     | 37,861         |  |     | 42,163  |  |     | 938  
|                            |  |                |        |                |     |                |  |     |         |  |     |      
|Total                       |  | Rs.            | 82,331 |                | Rs. | 97,295         |  | Rs. | 106,080 |  | US$ | 2,360
|                            |  |                |        |                |     |                |  |     |         |  |     |      

Africa

In 2008, the Company entered the South African market as a strategic partner to Neotel. The Company is also an anchor tenant on the privately owned
SEACOM cable system, which will have landing sites in South Africa, Mozambique, Tanzania and Kenya in Africa, in Mumbai, India, and in Marseille, France. The Company through its 100% owned subsidiary TCTS, a leading provider of business
transformation, telecom BPO and consultancy services, also manages the network administration, operations and maintenance functions of this SEACOM cable system. The Company is also actively pursuing partnerships in key African countries. In
September 2009, the Company announced a partnership with AccessKenya to launch a Tier 1 Internet Point of Presence in Kenya and in May 2010 announced a partnership with Infinity Africa to expand the reach of its IP network further into East Africa

Asia

On
August 18, 2009, the Company announced the completed installation, testing and commissioning of the TGN-Intra Asia (TGN-IA) Cable System, a 6700 km Undersea Cable System connecting Singapore, Hong Kong, Tokyo, Vietnam and the
Philippines. The Company also has network and commercial network partnerships in Thailand, Nepal, Phillipines, Korea, Vietnam, Singapore, Indonesia and Malaysia. In September 2010, the Company opened a 66,000 sq ft data centre in Singapore to
provide increased capacity for both domestic and international firms.

In 2008, the Company entered into an equity joint venture agreement
with the shareholders of China Enterprise Corporation Ltd. (CEC) under which the Company agreed to acquire a 50% ownership interest in CEC. On September 10, 2009 the Company announced that it extended its Ethernet service
portfolio into China to provide market-leading Ethernet services to global enterprises and carriers wanting to connect China with major global business centers worldwide. In June 2010, the Company and the shareholders of CEC jointly withdrew their
equity joint venture application with the Chinese Government and mutually agreed to terminate the various agreements regarding Tata Communications proposed equity investment in CEC while continuing their existing network services co-operation
relationship.

Middle East and North Africa

In the Middle East, the Company is a major investor and landing partner for the SMW3 and SMW4 cable systems that serve the region and is actively pursuing
investment opportunities to expand the reach of it sub-sea cable infrastructure into the region. Furthermore, the Company has expanded its reach into the Middle East and North African enterprise market with strategic partnerships for network and
managed services.



19



---

##### Table of Contents

On March 2, 2009, the Company announced that it will begin offering enterprise network services in the
UAE and that it had entered into a partnership agreement with Etisalat to extend its reach by offering Layer-2 Global Ethernet services into and out of the UAE. Furthermore, on June 8, 2009, the Company announced a strategic alliance with
Qtel that will strengthen both companies network reach in the region and internationally. The Company also has other commercial network partnerships in Bahrain, Kuwait, Oman, Saudi Arabia, Egypt, Morocco and Turkey for the provision of
telecommunication services. In fiscal 2010 the Company signed strategic partnership agreements with several of the major telecommunications operators in the Middle East to construct a new cable system into the Gulf which will connect the Region
directly to the worlds major business hubs and city centers via Tatas Global Network (the TGN).

Achieving
synergies with other Tata companies

Achieving synergies with other Tata companies would enable the Company to access the formers
existing subscriber bases and have the opportunity to share infrastructure costs. Accordingly, the Company has and continues to identify synergies and potential opportunities with other Tata companies. In particular, the Company has partnered with
Tata Consultancy Services, a leading IT services company, on several occasions to jointly provide TCS customers a broad range of end-to-end IT and telecom solutions.

Implementation of the Enterprise-wide Risk Management Framework

The Company has established an ERM framework to optimally identify and manage risks, as well as to comply with Clause 49 of the Securities and Exchange
Board of India Listing Agreement. The risk assessments performed under the ERM exercise and for compliance with Section 404 of the Sarbanes-Oxley Act (SOX) form key inputs for the annual audit plans for each business and functional unit. This
approach also ensures optimal synergy between our internal audit and the SOX compliance process.

Discussion on Climate Change

It is now generally accepted that the use of fossil energy sources and the related greenhouse gas (GHG) emissions lead to
an increase of carbon dioxide (CO2) in the atmosphere and
related adverse effects on the global climate. While the telecommunications industry is not as energy-intensive as other sectors, energy efficiency and GHG emissions reduction are important for the long-term success of the Company. Both our
business and our operations will be affected by the growing effects of a changing climate in many regions. One obvious effect will be an increase in electricity and the day-to-day operations costs of our facilities. With energy, GHG
emissions and water being growing cost factors, efficiency improvements and alternate sources have become important drivers for cost reduction.

To further increase energy efficiency and continue to reduce GHG emissions, we have established a Health, Safety and Environment (HSE) Council to review
the health, safety and environmental matters impacting the Company and the communities in which we operate. The Council is tasked with establishing a comprehensive energy management system, including control and auditing procedures and energy
standards for the Companys buildings and equipment.

HSE performance data will be collected, validated and consolidated using a uniform
tool. This data will be used for management purposes as well as for external reporting in line with international reporting standards. HSE auditing is an integral part of the corporate control process, assuring the Company of adequate systems
to ensure legal compliance, consistent HSE standards, and suitable and effective measures for maintaining a high level of health, safety and environmental protection.

The HSE Council is an independent group reporting into the Global Management Committee, and exercises governance on behalf of the GMC. It will
coordinate all HSE activities, propose Company-wide policies and practices, and define valid procedures for use across business units. The basis of this coordination is its committee structure, which includes both the Corporate HSE Steering
Committee and the Corporate HSE Coordination Committee. The former is responsible for corporate HSE policy, strategy, guidelines and the HSE audit program while the latter fulfils advisory/coordination functions - defining and revising corporate HSE
guidelines and coordinating and facilitating training, as well as discussing new legislative trends and exchanging knowledge.

Principal
Activities

The Company is a leading global communications company offering a broad range of integrated communications services in the
following three segments: Wholesale Voice, Enterprise and Carrier Data and Others.



20



---

##### Table of Contents

Set out below is a break-down of the Companys revenues by segment:



|                            |  |                                      |        |      |     |        |  |      |         |  |     |      
|--------------------------- |  | ------------------------------------ | ------ | ---- | --- | ------ |  | ---- | ------- |  | --- | -----
|                            |  | For the fiscal years ended March 31,
|                            |  | 2008                                 |        | 2009 |     | 2010   |  | 2010
|                            |  | (In millions)                       
|Wholesale Voice             |  | Rs.                                  | 46,687 |      | Rs. | 50,207 |  | Rs.  | 56,855  |  | US$ | 1,265
|Enterprise and Carrier Data |  | Rs.                                  | 18,809 |      | Rs. | 25,184 |  | Rs.  | 25,325  |  | US$ | 563  
|Other                       |  | Rs.                                  | 16,835 |      | Rs. | 21,904 |  | Rs.  | 23,900  |  | US$ | 532  
|                            |  |                                      |        |      |     |        |  |      |         |  |     |      
|Total                       |  | Rs.                                  | 82,331 |      | Rs. | 97,295 |  | Rs.  | 106,080 |  | US$ | 2,360
|                            |  |                                      |        |      |     |        |  |      |         |  |     |      

Wholesale Voice

The Company derives a substantial portion of its revenue from Wholesale Voice which it provides primarily to telecommunications carriers for the delivery
of international calls to over 240 countries and territories (greater than 1,000 destinations).

The Company is the leading wholesale voice
solutions provider in the world, with an estimated 14.1% market share of international wholesale voice traffic. The Company fully owns and operates one of the largest international voice networks with coverage in more than 240 countries and
territories. It maintains over 480 direct and bilateral relationships with leading international voice telecommunication providers. Transporting more than 32.6 billion minutes annually, the Company has a wide range of customers that can be divided
into 3 main categories: Mobile, Broadband and Carriers. In addition, the Company is the worldwide leader in international access voice services (toll-free, home country direct (HCD) and local number services) as well as being a leading
provider for other value-added services worldwide, such as ISDN, audiotext, operator, managed calling cards solution, voice peering and the newly launched IPX.

The Companys portfolio of global voice solutions is comprised of the following:



| |  | Voice Termination Services (ILD, VTS, VTS Economy, VTS Prime). Through its global TDM and VoIP network, the Company carries international long
distance traffic to 240 countries and territories around the world. VTS Prime, VTS and VTS Economy are solutions designed to meet each customers specific needs in terms of voice quality and price. VTS Prime is ideal for the Mobile, Retail and
Broadband segments where being the highest ratio of voice quality and additional features is required.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Wholesale Inbound Services or Access Services (Toll-Free, Local Number Services, HCD).The Companys access services are fully
automated, caller-dialed service options, which allow users to receive toll-free calls from various countries around the world. ITFS offers coverage from over 100 countries, UIFN from 45 countries, Local Number Services from 40 countries and HCD
from over 110 countries.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | UIFN (Universal International Free Phone Service). Sometimes referred to as a Universal 800 or Global 800 number. This
service is available in over 45 participating countries.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Managed Calling Cards Solution. Enables carriers to have a private-label prepaid calling service with products and rate plans customized to
their markets.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Audiotext. Provides transport traffic to destination numbers promoted by content providers in various countries for voice, data and/or online
information services which may be accessed via the international public telephone network.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | ISDN.Provides a high-quality, high-speed, clear channel data solution that delivers data connectivity to over 120 countries and is ideal for
video conferencing applications.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Operator. Services allow end-users to originate operator-assisted calls (collect and sent paid) to and from Canada.
|- |  | -------------------------------------------------------------------------------------------------------------------

Enterprise and Carrier Data Business

The Company is one of the worlds largest providers of data services, primarily focusing on International and National Private Leased Circuit (IPLC
and NPLC) services and IP transit services. The Company supplies some of the worlds largest international telecom companies with transmission backbone services across the Atlantic, the Pacific, and into and out of India. As a Tier 1 ISP, the
Company operates one of the largest IP networks in the world with points of presence around the globe. The company also provides network services and managed services to cater to the business needs of the top global multinational corporations across
the world.



21



---

##### Table of Contents

Enterprise Data Business

The Company offers customized, end-to-end voice and data solutions as well as managed services to enterprise customers worldwide, including:



| |  | International Private Leased Circuits (IPLCs). The Company provides international dedicated connectivity for customers who need
reliable, 24-hour communications from a fixed point in one country to a fixed point in another. These services are provided using the Companys international gateways, earth stations and cable stations.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | National Private Leased Circuits (NPLCs). The Company provides dedicated point-to-point domestic leased lines for customers who need
reliable, secure and dedicated connectivity between their offices across a particular country, such as India. The Company has set up a countrywide optical fiber cable backbone, which connects national long distance points of presence on a high
capacity network.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Internet Leased Line Circuits. The Company provides Internet leased lines, which are a high speed, flexible bandwidth solution that provide
constant internet access.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Dedicated Internet Access Services. The Company provides Internet access service with a dedicated Internet connection. The service provides a
flexible bandwidth solution with constant internet access speed.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Frame Relay Services. The Company provides frame relay services, which are a data transmission technique used to send digital information, such
as voice, data, local area network, and wide area network traffic quickly and cost-efficiently to many destinations from one port.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | ATM Services (Asynchronous Transfer Mode). The Company provides ATM services, which are used to send digital information, such as voice, video
and data traffic quickly and cost-efficiently to many destinations from one port.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Data Center Infrastructure and Application Services. The Company provides customers the option of outsourcing their mission-critical systems
operation through system collocation, server hosting, storage, and application hosting in the Companys data centers across India and the world whilst connecting to the Companys global network backbone. The company operates more than
1 million sq. ft. of space in data centers and colocation facilities across three continents.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Global VPN (Virtual Private Network) Services. The Company offers VPN services based on MPLS technology. Both layer 2 and layer 3 services are
supported. The Company operates 118 points of presence in fiscal 2010 to deliver the service across various locations within India. The Company also offers international VPN services across 65 countries and through VNO extended coverage to over 200
countries.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Global and Pan-India Ethernet Service. The Company offers metro, national and global Ethernet services to essentially the same footprint as its
Global VPN Services. The MEF certified Ethernet services are offered on both a SDH/SONET and MPLS platform.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Television Uplinking. The Company started providing television uplinking facilities on a 24 x 7 basis to various broadcasters in October 1998.
The Company also provides international and domestic relay of television programs and news services via satellite and fiber on a contractual basis as well as on an on-demand basis to various media customers. The Company also uses digital satellite
news gathering terminals for on-site live video uplinking.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Transponder Lease Services. The Company provides transponder capacity to media broadcasters and government institutions in India.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  | Hosted Contacted Center Services. The Company provides a range of contact center services hosted in the global network and based on world
leading solutions from Cosmocom.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | IPLC Service. This service is an uncompressed TDM voice solution for customers making bulk inbound / outbound calls between India and foreign
destinations, primarily suited for large customers such as call centers.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | MVOIP and IPVoice Connect.To meet the growing international long distance calling requirements of Enterprise Customers, the Company offers VOIP
solutions over its Internet and global VPN networks.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Business Messaging and Collaboration. The Company provides hosted Microsoft Exchange messaging with security, archiving/storage, and associated
collaboration applications. The service is offered as both Ready Access Business Messaging as an off-the-shelf software-as-a-service and as Adaptive Business Messaging as bespoke customer-dedicated implementations.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Business Audio and Web Conferencing. The Company provides global audio and web conferencing services to facilitate communications amongst
globally dispersed teams and audiences.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

##### Table of Contents

| |  | Managed Security Services. Listed in the Gartner Magic Quadrant for MSSPs, the Company is a Tier 1 provider of managed security services that
enable the customer to achieve information security compliance and business continuity in the face of continuously evolving security threats. In addition to being SAS-70 Type I&II and ISO-27001 certified, the Company has achieved worldwide
Cisco® Managed Services Channel Partner (MSCP) status and
Cisco® Powered designations for its managed Firewall, Managed IDS/IPS, Managed Internet and Managed MPLS VPN
Services.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Telepresence Virtual Meeting Room Services.The Company is a leading global provider of worldwide virtual meeting room services through managed
telepresence services for an enterprises private telepresence networks and also has a complementary global network of telepresence public rooms with 17 currently active public rooms across the world. The Companys telepresence exchange
service is the first in the world to deliver both private and public Cisco telepresence rooms to business globally, providing a broader ecosystem of connected rooms for enterprises and their partners.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Media management platform.The Company unveiled Mosaic, its media management platform in 2010. With its cloud-based media management, Mosaic
helps media customers improve cross enterprise collaboration for content creation management and multi-format delivery. It helps enterprises to deliver innovative services that meet rapidly changing consumer demands, maintain and expand audience
numbers and provides the flexibility of an open operating environment and lower production costs.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Global video network  Video Connect.The Company launched the worlds leading dedicated global video network called Video Connect,
designed to help broadcasters, studios and production houses deliver video content flexibly and cost effectively to media hotspots worldwide. It also enables permanent availability of bandwidth and seamless transmission of video at constant bit
rates ensuring round the clock system availability along with analytics to provide reports on video quality.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Carrier Data Business

The Companys portfolio of carrier data services is comprised of the following main product lines:



| |  | Global Transmission Services. The Companys Global Transmission Services, including IPLC and NPLC services, provide customers with dedicated
high-speed connections between the Companys network of global points of presence over which they can transport voice, data, facsimile, messaging and video conferencing. Within India, the Company operates a countrywide optical fiber cable
backbone, which connects national points of presence on a high-capacity network. These services are sold as leases or as standard 15-year IRUs (Indefeasible Rights of Use). The Companys global IP network called the Tata Global Network (TGN) is
comprised of one of the most advanced and largest submarine cable networks, which connects over 240 countries with more than 200,000 km of terrestrial and submarine optic fibers. The Company builds and operates its own global ring of cable systems
and is also a part of 80 other consortiums and private cables.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | IP Transit Service. The Company is a Tier 1 ISP and has a global IP backbone with communication nodes located throughout the world. The Company
connects customers in more than 132 countries to the Internet.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Local and International Internet Access Service. This service provides connectivity to customers from virtually any country to one of our
Internet nodes on the Companys global Internet backbone.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Managed Node Service. The IP transit service option is designed to enable customers to physically locate nodes in the Companys facilities
while still being an integral part of such customers network.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | White Label Enterprise Service. The Company sells managed network services, such as global VPN, as well as global managed services, such as
telepresence and managed security services.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Content Delivery Network Service. A content delivery network or content distribution network (CDN) is a system of computers networked together
across the Internet that cooperates transparently moving content behind the scenes to optimize the delivery process to deliver content (especially large media content) to end-users.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Others

In
addition to the Wholesale Voice, Enterprise Data and Carrier Data services described above, the Company offers a number of other services.



23



---

##### Table of Contents

National Long Distance (NLD)

The Company has a national network of about 41,000 route kilometers for national long distance services in India.

Mobility Services

The
Companys mobility services are tailored to the specific needs of the mobile network operators, providing them with the ability to seamlessly interconnect to other mobile networks as well as to leverage the Companys suite of innovative
roaming and messaging offerings offered in application service provider mode. The Companys mobility services include:



| |  | Wireless Global Roaming. The Company offers a Wireless Global Roaming Service (WGR) to mobile network operators. It allows for the
interconnection of signaling between different operating standards, such as the American National Standards Institute (ANSI) and International Telecommunications Union-Technical (ITU-T). It is predominantly used for
international roaming of subscribers between networks using either GSM or iDEN technologies.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | SCCP Service. SCCP is an inter-carrier signaling transport service, which relies on global titles of layer 3 of the SS7 protocol layer to route
SS7 traffic. Our SCCP service is designed for GSM and ESMR/iDEN mobile operators who wish to use our signaling network to interconnect to other mobile networks to allow roaming and SMS delivery. The Company also offers cross-standard SMS
termination which provides, among other services, ITU-T based mobile operators with the necessary translation of GSM SMS messages and its delivery to most North American Code Division Multiple Access, or CDMA, operators.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Managed Roaming Service (Steering of Roaming). The Managed Roaming service enables Operators to steer their outbound roaming subscribers to
preferred networks.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Intelligent CAMEL eXchange (ICX). ICXprovides a single point of connectivity for an extensive CAMEL footprint, while allowing Mobile Network
Operators to maintain bilateral roaming agreements. Offered as a managed service, ICX is an end-to-end service, whose scope covers normalization, testing and monitoring of the MNOs SS7 connections to their CAMEL roaming partners.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | SMS Hub Enablement.The SHE service offers a unique method of intelligent SMS routing, allowing greater flexibility and control over co-existing
bilateral and hub-based SMS-terminated traffic.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Signaling Monitoring, Alarming and Reporting Tool. This service, referred to as SS7 SMART, allows mobile operators to monitor the signaling
traffic they exchange with carriers worldwide in order to monitor and block potential fraud and unsolicited use of their network. SS7 SMART imbedded reporting tools also allow operators to generate traffic reports for the purposes of billing and
reconciliation of their SMS interconnection agreements.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Retail and Small Business Services

A brief description of some of the larger retail and small business services provided by the Company is set forth below:



| |  | Calling Cards. The company offers a retail International Calling Service in seven countries, namely the UK, the US, Canada, Hong Kong,
Singapore, Germany and France. The Company also provides white labeled services for calling cards of other operators by providing sharing of our IN-platform/infrastructure. The service is primarily sold on the web and it is intended for the South
Asian Communities to call back home when traveling abroad in these markets.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Gateway Internet Access Services. The Company offers an enhanced integrated dial up Internet service combining multiple services like Internet
access, net telephony and value-added services, to customers who are typically households and small businesses.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Broadband through Metro Ethernet. The Company provides broadband services using metro Ethernet technology, which enables data transfers at high
speeds.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Broadband through DSL. The Company provides Internet access using digital subscriber line technology, which provides bandwidth of up to 11 Mbps.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Broadband through WIMAX.The Company currently provides Internet access using Fixed Wimax (802.16d) technology.
|- |  | --------------------------------------------------------------------------------------------------------------



| |  | Internet Leased Line Circuits. The Company provides Internet leased lines, which are a high speed, flexible bandwidth solutions that provide
constant internet access.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net Access using Wi-Fi. The Company provides Wi-Fi, or Wireless Fidelity, with approximately 500 sites across India presently connected.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | Internet Telephony. The Company offers voice telephony over the Internet using Voice over Internet Protocol (VoIP), including
enhanced features like flexibility in billing and plans and superior voice quality.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Content Services. For its customers, the Company provides a range of content services, which include applications, audio and video services.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------



24



---

##### Table of Contents

The auction of spectrum for Broadband Wireless Access (BWA) services was conducted during June 2010. The
winning bids, in the Companys opinion, were in excess of what current broadband business cases could support, and seemed to reflect the effects of a perceived scarcity of spectrum combined with the limited number of slots being auctioned. The
Companys immediate focus would be to leverage synergies with enterprise play (including managed services, SaaS and cloud computing) with emphasis on the Small and Medium Business (SMB) market. The Company would await developments to evaluate
future opportunities in the retail segment.

Payments to and from Foreign Administrations or Carriers

The Company has entered into telecommunication agreements with more than 325 foreign telecommunications administrations or carriers that govern the rates
of payment by the Company to the foreign administrations or carriers for use of their facilities in connecting international calls, and by the foreign administrations or carriers to the Company for the use of its facilities (and the domestic Indian
networks) in connecting international calls billed abroad.

The practice among carriers for settlement of traffic is generally in accordance
with International Telecommunication Union (ITU) recommendations. Based on the accounting rate negotiated with each foreign telecommunications administration or carrier, the Company makes payments to the administration or carrier
for outgoing traffic and receives payments from such administration or carrier for incoming traffic. Settlements between the Company and the major carriers are generally made monthly, although settlements for long-term reciprocal traffic
exchange relationships (otherwise referred to as bi-laterals) are made quarterly or annually. Settlements are made on a net basis at the applicable settlement rate. Exchange of network capacity with other telecommunications service providers
are recorded as non-monetary transactions and measured at the carrying value of the capacities exchanged by the Company.

Revenue Sharing
Arrangements in India

Although the Company provides international gateway access out of and into India, all calls that either originate or
terminate in India must pass through the domestic networks of MTNL, BSNL or other private fixed line or cellular network operators. The Company has entered into interconnect agreements with BSNL, MTNL, and other fixed line and cellular
operators in India.

The commercial terms of the Companys agreements are based on the IUC announced by the TRAI from time to
time. The Company is required to pay termination charges of Rs. 0.40 per minute for international incoming traffic to India. The rates for outgoing international traffic are not regulated and are determined between the parties.

License Fees and Tariffs

ILD and NLD Licenses

Under the Companys ILD and NLD licenses, a license fee is payable annually in an amount equal to 6% of the adjusted gross revenues from the
Companys ILD and NLD services, respectively.

In fiscal 2005, the Company filed a dispute with the Department of Telecommunications in
India (DoT) because the DoT was including certain income (e.g., investment and interest income, income from the sale of property, plant equipment, foreign exchange gains and other non-operating income) and excluding certain deductible
expenses (e.g., bandwidth and other network related costs) while calculating adjusted gross revenues for purposes of the license fees. The DoT refused to consider the Companys arguments.

In fiscal 2005, the Company filed a petition with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to obtain the
TDSATs opinion on whether or not the DoTs basis of determining the license fee was correct. In August 2007, the TDSAT ruled that license fees were not payable on certain income, such as income from investments, the sale of immovable
property, plant and equipment, foreign exchange gains and other non-operating income. The TDSAT also ruled, however, that bandwidth and other similar network costs incurred by the Company should not be deducted from gross revenues when computing the
Companys license fees.

The Company filed an appeal in the Supreme Court of India challenging the TDSAT decision regarding not being
able to deduct certain expenses from the calculation of adjusted gross revenues.

As a result of the TDSAT ruling above, the DoT made a demand
against the Company in January 2008 for fiscals 2003, 2004 and 2005 of Rs. 2,950 million for (a) an additional payment of license fees of Rs. 830 million, (b) compounded interest of Rs. 910 million on unpaid license fees,
(c) penalty and interest on penalty of Rs. 772.5 million and Rs. 377.5 million, respectively; and (d) an excess claim of Rs. 60 million, which has been adjusted against the demands in the subsequent years.



25



---

##### Table of Contents

In January 2008, the Company paid the entire Rs. 2,950 million to the DoT, which was recorded as a
license fee paid under protest. The additional license fee and interest totaling Rs. 1,740 million (the sum of (a) and (b) above) has been accrued as a liability by recognizing the same as an expense. This accrued liability of
Rs. 1,740 million has not been offset against the payment of Rs. 2,950 million pending the outcome of the Companys challenge of the TDSAT decision in the Supreme Court.

The Company had also challenged the legality of penalty provisions in the license agreement in TDSAT. TDSAT accepted the Companys position and
passed the ruling in favour of the Company striking the penalty provisions in the license agreement. Consequently Rs.1, 150 million becomes refundable by DoT. DoT has disputed TDSATs order in the Supreme Court.

In fiscal 2010, DoT completed their assessment for fiscal 2006 and raised a demand of Rs. 1,046 million. The Company challenged DoTs order in the
TDSAT and TDSAT, in its order dated August 19, 2010, held: a) a license fee is not applicable on non-telecom income and other miscellenous income; b) penalty and interest thereon is not applicable on a shoftfall of a license fee; c) a
deductions in AGR for cost items is not allowed; d) a suo-moto inter-license adjustment by the licensee is not permitted. Hence, the Companys liability was reduced to Rs. 50.83 million including interest up to September 2010.

The Company intends to challenge the TDSAT order in respect of the disallowance of cost items before the Honourable Supreme Court, where similar disputes
for the previous years are pending. The Company also intends to file a seperate petition in TDSAT for adjustment for an excess amount paid against proposed ISP VPN licenses.

License fees under the ISP with Internet Telephony (restricted) license

The Company pays an annual license fee to the DoT under its ISP with Internet Telephony (restricted) license in an amount of 6% of AGR. AGR has been
defined as gross revenue including certain revenues and excluding certain charges. The Company paid license fees of approximately Rs. 47 million for fiscals 2008, 2009 and 2010, representing 6% of AGR excluding income from non-licensed and
financial activities, consistent with the Companys position that it should be permitted to exclude non-ISP related revenue. The Company, however, has made a provision of approximately Rs. 31 million in the event the DoT and TDSAT decide
against the Companys position.

Tariffs for IPLC (Half Circuits)

In 2006, the TRAI fixed ceilings on tariffs in respect of E-1 (2MBPS line), DS-3 (45 MBPS) and STM-1 (155 MBPS) capacities at Rs. 1.3 million,
Rs. 10.4 million and Rs. 29.9 million per annum, respectively. Subsequently, the DoT permitted the resale of IPLC services, although it is not clear if any resellers have begun operations. Further, in June 2007, the TRAI
directed owners of cable landing stations to allow eligible Indian international telecommunication entities to access international submarine cable capacity on any submarine cable system. This resulted in full capacity landing by eligible
Indian international telecommunication entities, which may also result in a reduction in prices of IPLC services.

Domestic Leased Circuit
Tariffs

In 2005, the TRAI fixed ceilings on tariffs in respect of E-1 (2MBPS line), DS-3 (45 MBPS) and STM-1 (155 MBPS) capacities at
Rs. 0.85 million, Rs. 6.16 million and Rs. 16.5 million per annum, respectively.

Sales and Marketing

Wholesale Voice

The Companys global Wholesale Voice business unit is focused on international voice solutions, which are provided to mobile operators, broadband
operators, web portals and carrier customers. The Global Voice Solutions (GVS) sales team is the primary interface with telecommunication operator customers throughout the world. The team is responsible for building relationships with
local/regional service provider customers in order for them to sell voice solutions to their end users. The GVS sales team is also responsible for securing supply capacity in support of voice termination services around the world. The team is
comprised of a global organization, maintaining a local presence in key markets around the globe. The Global Voice marketing team is engaged in new product development as well as managing existing product operations to meet customer and market
requirements.



26



---

##### Table of Contents

Enterprise and Carrier Data

Enterprise Data

The
Companys Enterprise Data business unit provides a suite of managed network and connectivity solutions, managed services (including managed infrastructure) and applications services to enterprises worldwide to meet their business needs and
growth requirements with a focus on specializing in emerging markets. The business needs of enterprises are taken into consideration as our global product management organization develops, launches and broadens enterprise services in all markets.
Each region has a direct and an indirect (Channel Partner) strategy, and through well defined strategies, the Company provides solutions that meet the needs of enterprise customers on a regional as well as global basis.

In India, the Enterprise Business Unit is structured to service differentiated segments via different pan-India sales groups. Large corporate and
government customers are addressed by a direct sales team, whereas enterprise services to medium enterprises are led through an indirect or channel partner model A specialized channel sales and enablement team manages approximately 150 channel
partners to provide network services and managed services to the target segment.

Internationally, the Enterprise Business Unit is managed in
each region through the Tata Communications direct and indirect teams located in the Americas, Europe and Africa, the Middle East and North Africa (MENA), and Asia. These teams are focused on providing network services and managed services to
cater to the business needs of the top 2,000 global multinational corporations as well as the fast growing emerging enterprises in those regions. In addition, the Company presence in these geographies is being expanded by leveraging the regional and
global partners (system integrators and IT partners) to serve some of the large corporations as well as mid-tier enterprises in these markets.

Carrier Data

For
carrier connectivity services, the Company operates a focused sales force predominantly targeting its largest global and India-based carrier customers. For key global customers, the teams are organized under a single global account manager who is
based near the customers headquarters, and who in turn supports account managers based in regions where the customer also does business. There is a dedicated team in India that supports India-based carriers as well as all global carrier
requirements in this particular market.

Others

The Retail and Small Business unit primarily caters to retail and small business customers in India which primarily consist of individuals, small/home
offices and small and medium sized enterprises. The large range of the products of this unit is standardized for mass usage and is not specifically tailored services. Some products like Internet Leased Lines and Internet Telephony though have a
certain degree of customization.

The products are largely sold through a direct sales channel. Alternate channels like direct selling
associates, channel partners and online are also available. The unit places specific emphasis on creating awareness and educating prospective customers about the Companys products.

Government Regulations

The business of
the Company and its subsidiaries is subject to comprehensive regulation by various governmental bodies around the world, including in India, the U.S. and Europe.

India

The
Ministry of Communications of the Government of India, through the Telecom Commission and the DoT, is responsible for telecom policy and licensing in India. The TRAI is responsible for ensuring that the interests of consumers are protected and to
nurture conditions for growth of telecommunications, broadcasting and cable services in a manner and at a pace which will enable India to play a leading role in the emerging global information society. The Company has ILD, NLD, Internet Telephony
Service Provider (ITSP), TV uplinking and unified messaging service licenses in India.

United States

In the U.S., the Federal Communications Commission (FCC) exercises jurisdiction over the facilities and services that the
Company uses to provide interstate and international telecommunications services. The FCC may promulgate new rules, revise old rules, or otherwise change regulatory requirements that affect the Company from time to time; such changes are often
followed by judicial review. The Company is unable to predict future FCC rulings and the results of any subsequent judicial review or how these might affect our operations. State regulatory commissions generally have jurisdiction over intrastate
telecommunications services and related facilities, but the Company does not currently provide intrastate services.



27



---

##### Table of Contents

International Regulation. The Company has obtained the necessary authority under Section 214 of
the Communications Act of 1934, to use on a facilities and resale basis, various transmission media for the provision of international switched services and international private line services on a non-dominant carrier basis, except that the Company
is regulated as a dominant carrier on the U.S.India route. The Company also holds multiple FCC licenses granted under the Cable Landing License Act and FCC rules to own and operate undersea cables that land on U.S. shores.

Canada

The
Canadian Radio-television and Telecommunications Commission (CRTC) is the regulatory authority in Canada that is charged with regulating companies that provide telecommunications services in Canada. The Company holds a Class A Basic
International Telecommunications Service (BITS) license issued by the CRTC which authorizes the Company to operate telecommunications facilities used in transporting basic telecommunications service traffic between Canada and other
countries.

European Union

The Company provides international telecommunications services in several of the member states of the European Union (EU). In the EU, the
regulation of the telecommunications industry is governed at a supranational level by the European Parliament, Council and Commission. Implementation of EU directives has not been uniform across the Member States. Even with harmonization, the
national regulatory agencies continue to be responsible for issuing general authorizations and specific licenses. The Company is required to obtain and maintain a variety of telecommunications authorizations in the countries in which it
operates. The Company must also comply with a variety of regulatory obligations, including obtaining permits to land its cables in the territories to which they are connected and payment of regulatory fees.

Asia-Pacific Region

The Company holds all necessary telecommunications and other licenses that permit it to own and operate assets in key countries and regions, including
Taiwan, Japan, Hong Kong and Singapore.

Other Markets

The Company is also subject to regulation in several other countries throughout the world in connection with its subsea cable, carrier services and other
telecommunications service activities. In these jurisdictions, the Companys local operating entities hold non-exclusive licenses or operate pursuant to general authorization.

Organizational Structure

The Company is
partially owned by some of the Tata companies. The Tata companies are 100 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Tata
companies are one of Indias largest and most respected business conglomerates, with revenues of approximately US $70.8 billion in fiscal 2009. The Tata companies collectively employ over 363,039 people. The Tata companies have operations in
more than 80 countries and export products and services to 85 countries.

As of March 31, 2010, Panatone Finvest Limited, in conjunction
with certain other Tata companies, held 50.03% of the outstanding equity of the Company, and the Government of India held 26.12 percent. See above under the heading History and Development of the Company.



28



---

##### Table of Contents

As of September 30, 2010, the Company and its subsidiaries (including its joint ventures but excluding
stock held for investment purposes only) included the following legal entities:



|    
|----
|LOGO



29



---

##### Table of Contents

Significant Subsidiaries

Tata Communications International Pte Limited

Tata Communications International Pte Limited (TCIPL) (formerly known as VSNL International Pte Limited) is a wholly owned direct subsidiary
of the Company that serves as the Companys international holding company for the Companys operations outside of India, with the exception of the Companys activities in South Africa and Sri Lanka, which are undertaken by different
subsidiaries. TCIPL also serves as an operating company with significant operations in Singapore, providing customers communications services into and out of Singapore.

Tata Communications Internet Services Limited

In fiscal 2008, the Company hived off its retail Internet and broadband business to its wholly-owned subsidiary, Tata Communications Internet Services
Limited (TCISL, formerly known as Direct Internet Limited). TCISL provides Internet and broadband services to consumers and small and medium sized businesses in India.

Neotel (Pty) Limited (Equity method investee)

The Company through a wholly owned subsidiary incorporated in Singapore acquired 43.16% of SEPCO Communications Pty. Ltd (SEPCO), a company incorporated
in South Africa, which in turn owns 51% in Neotel. In January 2009, the Company through the same wholly owned subsidiary in Singapore, acquired an additional 27% stake directly in Neotel. Neotel offers telecommunication services to the wholesale,
enterprises and consumer segments. Neotel runs the first Next Generation Network and the first CDMA network of South Africa (SA).

Property, Plants and Equipment

The
Companys operations are conducted from owned and leased properties in the various locations in which the Company and its subsidiaries conduct business. The major services provided by the Company are based on its bandwidth capacity in various
undersea cable and land cable systems and satellites. These assets are briefly described below.

Undersea Cables

The Company has ownership interests and access to capacity in various undersea cables interconnecting the South Asia region, as well
as linking that region with Europe, Africa, North America and Asia-Pacific.

The Company owns and operates five specific fiber-optic cable
systems: TGN-Pacific, an eight-fiber pair ring cable system between Japan and the West Coast of the U.S.A and a four-fiber pair linear submarine cable system from Japan to Guam. TGN-Pacific is the largest cable system across the Pacific in terms of
activated and future capacity design; TGN-Atlantic, which is a four-fiber pair ring cable system between the East Coast of the U.S.A. and the UK; TGN-WER, which is a four-fiber pair ring cable system between Portugal, Spain and the UK and Tata
Indicom Cable (TIC), which is a 3,100 km eight fiber pair submarine cable system between Chennai, India and Singapore. Additionally, in August 2009, the Company completed construction of a wholly-owned four fiber pair linear submarine cable system
connecting Singapore, Hong Kong, and Tokyo (TGN-Intra Asia), which will also directly connect to partners in Vietnam and in the Philippines through branching units. The TGN-Intra Asia System has added over 1,100GBit/s lit capacity, which
represents just 10% of Tatas potential capacity on the system.

In order to meet fast growing bandwidth and diversity requirements in
India, the Company has taken the initiative to invest in two new submarine cable systems between India and Europe linking Mumbai, India to Marseille, France. The first is a private system and will be known as TGN-Eurasia, which will have a minimum
capacity of 1.28 Tbps and is expected to be completed in late 2010. The second is a shared system based upon the traditional consortium model and is known as IMEWE (India-Middle East-Western Europe), and is also expected to be operational in late
2010.

The Company has also secured IRU capacity in the SEA (South & East Africa) cable system (SEACOM). This system was built under
a third party initiative and the main segment between South Africa and Mumbai, India was put into service in August 2009. As of August 2009, the SEACom system provides direct connectivity from South Africa and Eastern Africa to India, and will
provide direct connectivity to Europe before the end of 2010.

The Company also has ownership in the South East Asia-Middle East-Western
Europe 3 (SEA-ME-WE 3) consortium cable, a medium capacity undersea optical fiber cable extending from Germany to Japan and Australia that lands in a total of 33 countries and which carries the Companys voice, data and Internet traffic between
those countries.



30



---

##### Table of Contents

The Company also has ownership in SEA-ME-WE4, a high capacity undersea cable system between France and
Singapore which lands in 14 countries in Southeast Asia, the Middle East and Europe. Since going into service in 2005, this system has been upgraded twice and will soon undergo its final upgrade and is projected to be carrying its maximum amount of
traffic by the end of 2010 or 2011.

The Company has ownership in the Asia Pacific Cable Network 2 (APCN2) consortium cable, a large capacity
undersea optical fiber cable ring extending from Singapore to Japan via Hong Kong, the Philippines, South Korea, Taiwan and China which carries some of the Companys voice, data and Internet traffic between those countries.

The Company has also invested in the South African Telephony-3 /South Asia Far East (SAT-3 /SAFE) undersea cable linking India and Malaysia in the East
to Portugal in the West via South Africa. The total length of this link is 28,800 km with a design life of 25 years. The Company operates voice, data and Internet circuits on this undersea cable.

As part of its expansion in the Middle East, the Company is constructing a new TGN-Gulf cable system in partnership with several major telecommunications
operators in the Middle East. The TGN Gulf cable on which work began during October 2009 and which will be completed in the second half of 2011, will act as a gateway to the TGN network connecting the region with reliable high speed bandwidth to all
the key cities of the world.

In order to further meet fast growing bandwidth and diversity requirements from Africa to Europe and the USA,
the Company has taken the initiative to invest in a new submarine cable system between South Africa and Europe, linking Cape Town, South Africa to London, U.K. along with 12 intermediate landings on the west coast of Africa and Europe. The system
will be known as WACS (West Africa Cable System), and is expected to be completed during 2011.

The Company has secured IRU capacity in the
PPC-1 (Pipe Pacific Cable 1) cable system that was completed and ready for service in late October 2009. The PPC-1 system provides direct connectivity from Guam to Sydney, Australia, and will address the growing needs of Australia for bandwidth and
diversity.

The Company also has lesser ownership interests in various undersea consortium cables, including Trans-Pacific Cable-5 (connecting
the U.S., Canada and Japan), Trans Atlantic-14 cable (connecting the UK, France, Germany and the U.S.), FLAG Europe-Asia Cable (connecting Europe and Asia), Japan-US Cable (connecting the U.S. and Japan), Asia Pacific Cable Network (connecting
Singapore and Japan), Americas-2 Cable (connecting Caribbean and Latin American countries), Columbus-3 cable system (connecting Portugal and the U.S.A.) and a new cable Unity Cable between Japan and the USA planned to be in service by the end of
2010.

Points of Presence

The Company has equipped nodes in the Americas, Europe, the Middle East, Africa and Asia Pacific to provide and support the Companys suite of
products and services globally. Our coverage on VPN extends to 65 countries with 164 GVPN pops and NNIs and through our VNO, the Company extends service to over 200 countries. The Company also has over 223 IP Transit pops strategically located in 29
countries, 2270 G of IP backbone capacity that is spread over 5 continents. The Company is one of the top 10 Global Tier One Providers and within the top 10 Best Connected Network and 1400 Petabits of Internet traffic carried every month.



31



---

##### Table of Contents

Property and Plants

In addition to the cables and switches described above, the Companys infrastructure includes owned and leased property made up of cable station,
collocation, rack and cabinet space in collocation centers in 20 countries with those material properties detailed below (Note: IDCs, Admin offices, Telepresence rooms and Partnerships sites excluded)



|              |  |            
|------------- |  | -----------
|Region        |  | Square feet
|North America |  | 775,116    
|Europe        |  | 205,006    
|Asia-Pacific  |  | 81,107     

The Company also has three large
earth station teleports in Canada to operate in the Atlantic and Pacific Ocean Region and one small leased teleports in Denmark to operate in the Indian Ocean Region. From these sites, it currently accesses more than 15 different satellites and can
use approximately 50 satellite earth station antennas.

Voice Switches

For NLD traffic in India, the Company operates 9 TDM switches and an NGN Voice network. For the Companys ILD traffic, the Company operates
TDM & NGN international switching facilities in 14 gateway locations, of which four are located in India, three in the U.S., two in Canada, and one in each of Madrid (Spain), London (U.K.), Frankfurt (Germany), Singapore and Sydney
(Australia). All gateways route international traffic (including transit traffic) to and from the domestic telecommunications network using a combination of terrestrial fibre optic facilities, undersea cable links and satellite transmission
facilities.

NGN

The Company has deployed and commissioned an NGN Voice network to cater to its NLD voice business. The infrastructure consists of soft-switches in Mumbai,
Delhi and Chennai, India. The network was commissioned in July 2007 and its usage has now been extended to include international traffic.

Similarly, for its ILD traffic, the Company has deployed NGN Voice soft-switch components for international requirements in ten locations (Los Angeles,
Newark, New York, Montreal, Toronto, London, Madrid, Frankfurt, Sydney and Singapore).

India Domestic Bandwidth Media,
Access Network & Data Centers

Since 2002, the Company has deployed NLD connectivity with 196 points of presence on 39,668
segment wise STM-1 equivalent bandwidth. NLD augmentations have been implemented to meet the forecasted growth.

Wimax

The Company is deploying a wireless access network across India to address the last-mile access requirements of large enterprise, SMEs
and retail businesses. The Companys wireless access network is based on the state of the art Wimax technology in the 3.3 -3.4 GHz band. The Companys deployment covers approximately 157 cities for enterprise coverage (via Wimax +
MMDS) and three metro cities for retail broadband coverage with a combined total of approximately 1000 base stations. With this deployment, the Company now has extensive wireless coverage which will provide tremendous reach to its customers in these
markets.

Data Centers

During fiscal 2010, the Company completed construction of approximately 62,623 square feet of usable area data center space in the cities of Mumbai,
Chennai, Hyderabad and Delhi, India. In addition, the Company added over 10,000 square feet of data centre space in Highbridge, UK, Santa Clara and New York, USA. By 2011, the Company plans to add 21,606 square feet in Pune, India. The Company
launched the first service provider data centre in Kolkata with over 5, 343 square feet of usable space.

In addition to increasing data
centre capacity during fiscal 2010, the Company added enhancements to the existing hosting and storage services including clustering services, off-site tape storage services, support for IBM AIX systems and expanded availability of managed hosting
services. By 2011, the Company plans to expand the range of existing products with other value-added services like virtualization/cloud computing and managed DBA services to its customers.



32



---

##### Table of Contents

Non-India Domestic Bandwidth Media Carrying Voice, Data and IP Circuits

As of March 31, 2010, the Company operated a total of 1,080,844 international circuits supporting the Companys voice and
data services and products. Of the 1,080,844 international circuits, 979,458 circuits were used to support voice services and products. The remaining 101,386 circuits are a combination of backbone circuits connecting the
Companys extensive global data networks to provide data and enterprise voice services.

Satellites

In India, the Company has seven satellite earth stations in operation. The Company operates a total of 1509 Switched TDM voice
circuits using one of these earth stations in India, resulting in a total of 312 equivalent 64 Kbps satellite channels. The Company also operates data circuits on these satellites for a total of 10 equivalent 64 Kbps satellite channels.

The Company also has three large earth station teleports in Canada and one small leased teleport in Europe. From these sites, it accesses more than 15
different satellites but also has extra-antennas that can operate on differents satellites if required.

Other
Facilities

The Companys infrastructure includes various facilities used primarily for its various specialized and value-added
Enterprise and Internet services. As of March 31, 2010, the Company owned a high capacity underground fiber optic cable across the country, approximately seven earth stations, terrestrial communication links connecting the Companys
National Domestic Switches (9 TDM Switches and 9 NGN Media Gateways) with the Companys international switches (4 TDM Switches and 9 NGN Media Gateways, 2 IN Switches and 2 VOIP Switches) at four of its locations with its earth
stations and cable stations and a variety of hardware used in more than 160 cities in India for the Companys 124 Internet access nodes in India. As of March 31, 2010, the Company has a high capacity underground fiber optic cable
national network of about 41,000 route kilometers.

Demerger of Surplus Land

Under the terms of the share purchase and shareholders agreements signed between the GoI and the strategic partner (the parties) at the time of
disinvestment, it was agreed that certain identified lands would be demerged into a separate company. It was further provided that if, for any reason, the Company cannot hive off or demerge the land into a separate entity, alternative courses as
stipulated in the share purchase and shareholders agreement would be explored. A draft scheme of demerger was presented to the Board in April 2005, and the parties are examining the legality and feasibility of implementing the scheme. The land
identified for demerger at different locations measured 773.13 acres.

The VSNL Employees Cooperative Housing Society, Chennai (Society) had
moved the Honble Delhi High Court in respect of their long pending issue of transfer of 32.5 acres of land situated at Padianallur, Chennai, which was part of the identified surplus land. According to the order of the Honble High Court,
the process of transferring the said land to the Society was completed. The land now measures 740.63 acres having a book value of Rs.1.63 million.



|ITEM 4A. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



33



---

##### Table of Contents

|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------

The following discussion of the results of operations for the fiscal years ended 2008, 2009 and 2010 and the financial condition of the Company as at
March 31, 2009 and 2010 should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto included elsewhere herein prepared in accordance with US GAAP. The Companys fiscal year ends on
March 31 of each year, and therefore all references to a particular fiscal year are to the twelve months ended March 31 of such year.

Introduction

The Company is a
facilities-based service provider of a broad range of integrated communications services. The Company generates revenue from three business segments: Wholesale Voice, Enterprise and Carrier Data, and Others.

Wholesale Voice

The Company is the worlds largest wholesale voice player with approximately 14.1% market share and owns and operates international networks with
coverage in more than 240 countries and territories and maintains over 480 direct and bilateral relationships with leading international voice telecommunication providers. Traffic into and out of India continues to represent a significant portion of
the Companys Wholesale Voice segment and the Company is a market leader in terms of the volume of inbound termination of calls to India. In fiscal 2010, the Company carried 32.6 billion minutes of international wholesale voice traffic.

Over the past several years, the global voice market has experienced an increase in traffic volumes as a result of significant growth in
telephone density in developing countries and high growth rates in the number of cellular subscribers worldwide.

In India, where the Company
is a significant player in wholesale voice services, the telecom market is growing rapidly and is expected to be worth Rs. 158.52 billion by 2010, contributing 5.6% to Indias gross domestic product (GDP). According to the latest figures from
the Telecom Regulatory Authority of India (TRAI), during 2009-10, Indias mobile subscriber base increased approximately 124%, from 261.09 million to 584.32 million, while the fixed subscriber base declined approximately 6.24%,
from 39.42 million to 36.96 million. The past year has also witnessed significant regulatory developments, including changes in the access deficit charge (ADC) regime, a review of the Interconnect regime and recommendations on issues like
Mobile Virtual Network Operators, Internet Telephony and Carrier Access Code (CAC)/calling cards. Mobile Number Portability (MNP) is expected to be implemented during the latter half of 2010.

The international wholesale voice market continues to be a business of scale, with constant pressures on prices and margins. The recent global economic
downturn has further increased the pressure on prices for international voice calls. Alternate services, such as portal-based offerings on the Web, are growing in popularity and usage. The share of mobile communications continues to grow in relation
to fixed voice and there is an increasing use of Voice over Internet Protocol (VoIP) in providing services.

The need for profitability in a
largely commoditized market is making operators seek both scale and efficiency in their operations. Apart from driving consolidation, this could also create new business models based on greater collaboration between operators, which we believe the
Company is well positioned to benefit from.

Enterprise and Carrier Data

The Indian Enterprise and Carrier Data segment has been growing at a very healthy rate. In the past financial year, even after adjusting for the
market-driven price drops, the Indian industry grew in terms of revenue. This growth is driven by two factors. Firstly, Indian businesses are increasingly adopting IT and networking technology to improve productivity and create competitive
advantage. Secondly, since Indian business is growing globally and international companies are increasing their Indian presence, there is an associated need for greater connectivity to and within the country. Banking and financial services,
information technology and business process outsourcing/call centres are some examples of high growth sectors in the country.

Internationally, increasing costs of capital have resulted in the delay and cancellation of private data center facilities, driving more purchases of
data center collocation and hosted computing services from external service providers. Virtualization technology is changing the economics of data center computing, with utility computing and cloud computing on the cusp of moving into the
mainstream. The Companys global and India managed hosting services are aggressively supporting this direction. Along with Managed hosting there is an increasing trend on global as well as Indian enterprises to outsource telecom services on a
Managed Basis. The Company has over the years developed other Managed services like Managed Security services and Telepresence which enables the Company to capitalize on these emerging trends in enterprise space. These managed services
also enable Enterprises to reduce costs of In-house Telecom teams and at the same time enable the Company to capture a higher portion of the overall Telecom spend of enterprises.



34



---

##### Table of Contents

Tata Communications endeavour is to continuously develop new products and services to enhance value
for customers. The Company combined its next generation managed security solutions with superior Internet leased line products, and launched its Internet Clean Pipe Solution for small and medium business segments. As part of the Global Media and
Entertainment Services (GMES) portfolio, Tata Communications unveiled Video Connect and Mosaic. Video Connect is the worlds leading dedicated global video network designed to help broadcasters, studios and production houses deliver video
content flexibly and cost effectively to media hotspots worldwide. Mosaic is Tata Communications media management platform which with its cloud based media management capability helps media customers improve cross enterprise collaboration for
content creation management and multi-fomat delivery.

The global data market is undergoing rapid changes. With the growing need for bandwidth
around the world, there continues to be growth in the demand for submarine cable capacity. Several new cable systems have been announced or are being constructed in different markets, such as across the Pacific, within Asia, connecting Europe and
Asia and on both the east and west coasts of Africa. Availability of large capacity in line with market growth and diversity to provide continuity of services in the event of cable cuts due to acts of man or nature continue to be important drivers
of this growth. The addition of these new cables presents both investment opportunities as well as downward price challenges.

The global
enterprise market has seen growing demand for network services, data center services, and value-added services. While the global recession has caused delays in decision-making and deferred procurement by some customer segments, information and
communications technology investments by enterprises broadly continues to grow. This is motivated by the need for better engagement and service levels with their own customers, the need for higher velocity and flexibility in business, and the growth
of global supply chains and markets. Industry leaders are more sharply focused on increasing the ratio of IT budgets that are applied to competitive advantage and innovation versus basic services and compliance.

Also over the past two years the Company has focused on creating its competitive differentiator in emerging markets. Leveraging its strong base in one of
the fastest growing emerging markets of India, the Company has further expanded its presence in other emerging markets like the Middle East, South Africa and parts of Asia. The increasing commerce between the developed countries and emerging
markets in the post slow down era has resulted in increased need for Telecom connectivity to and from emerging markets. The Company is thus in a competitive position to serve the needs of enterprises to and from emerging markets and going ahead the
Company expects to continue investing in emerging markets to further strengthen its position.

Others

In the retail and small business space, Tata Communications offers connectivity, messaging, internet telephony and a wide variety of
content services as a premier Internet Service Provider (ISP). The growth in broadband subscribers has been slower than anticipated, due to limited availability of quality last mile networks capable of delivering the bandwidth that broadband needs.
Further growth in this business was linked to the Company being able to successfully acquire spectrum in the Broadband Wireless Access auction. The Company was not able to acquire spectrum in any of the circles because of prices that the Company
believes were in excess of what current Broadband business cases support. In the immediate term, the Company will step up its focus on the rapidly growing small and medium businesses (SMBs) segment and will approach the market led by a
portfolio of business applications which include highly customized Internet Leased line services along with VoIP and Value Added Services like Security and Web hosting, etc.

New Growth Opportunities

TCTSL

With the
increasing need for reducing costs, several carriers around the world are looking to rationalize costs and relocate some of their business processes. They are also looking to improve operating efficiencies and network/infrastructure productivity.
Leveraging its operating expertise across a wide variety of technology platforms as well as global experience in different developed and emerging markets around the world, and its relationships with these carriers, the Company is seeking to cater to
this need. This initiative is being implemented through Tata Communications Transformation Services Limited (TCTSL), a wholly-owned subsidiary in India. Through its world-class delivery centres in Pune and in Chennai, TCTSL provides business
transformation, telecom BPO and consultancy services to telecommunications carriers around the world. TCTSL delivers solutions for all stages of the carrier processes and operations, such as network engineering, design, implementation and
operations. TCTSL operations are totally independent, ensuring full confidentiality in managing the business processes of its customers. TCTSL employs approximately 1000 people and has offices in Europe and North America.



35



---

##### Table of Contents

TCBIL

In order to capture emerging opportunities in the banking and financial services sectors, the Company formed Tata Communications Banking InfraSolutions
Limited (TCBIL) in February 2008, as its wholly-owned subsidiary. With a highly experienced team of professionals from the banking and financial services industry, TCBIL commenced commercial operations in April 2009. TCBIL provides infrastructure
solutions to the banking industry, including services relating to establishing and operating Automated Teller Machines (ATMs), Electronic Transaction Processing Solutions (ETPS), Cheque Truncation Services (CTS), and Core Banking Solutions (CBS).

Joint Ventures and Acquisitions

CEC

In fiscal
2009, the Company entered into a joint venture agreement with the shareholders of China Enterprise Communications Limited (CEC) to acquire a 50% equity interest in CEC, subject to the approvals of the requisite governmental and regulatory bodies in
China. In fiscal 2010, Tata Communications (Hong Kong) Ltd., a wholly-owned indirect subsidiary of Tata Communications Ltd and the shareholders of CEC jointly withdrew their equity joint venture application with the Chinese Government and mutually
agreed to terminate the various agreements regarding Tata Communications proposed equity investment in CEC while continuing their existing network services co-operation relationship.

Cable Depot JV at Cochin

The South East Asia and Indian Ocean Cable Maintenance Authority (SEAIOCMA) consortium, which maintains undersea cables in the Asia-Pacific region, has
engaged and stationed a repair ship owned by Indian Ocean Cableship Pte Ltd. Singapore (IOCPL) at Cochin port, in order to enable SEAIOCMA to repair damaged cables in the Indian Ocean region efficiently in minimum time. To support the ship in
securing ready spares required for the repair of cables, the Company entered into a 40/60 joint venture with IOCPL (the Company is the 40% partner) to establish a cable depot at Cochin to house submarine cable spares. During fiscal 2010, the Company
purchased 40,000 shares in Cochin Submarine Cable Depot (India) Pvt. Ltd. (CSCDIPL)(face value Rs. 10 each) for an aggregate purchase price of Rs. 0.4 million. Keeping in mind the land and customs duty issues at Cochin port and non-availability of
any suitable location elsewhere in India, the Board of CSCDIPL approved the winding up of CSCDIPL for which necessary steps have been initiated.

Acquisitions

As
discussed elsewhere in this Form 20-F, the Company has completed several acquisitions. See History and Development of the Company in Item 4. The Company sees a growing proportion of its revenues from its operations outside of India and these
acquisitions can and will have a significant impact on this trend.

Operating Results

Fiscal Year 2010 Compared to Fiscal Year 2009

The following table sets forth information regarding the Companys net income for the fiscal years ended March 31, 2009 and 2010:



|                                                   |  |                  |   |      |              |                      |                  |   |                      |                   |   |  |              |  |                  |   |  |         |  
|-------------------------------------------------- |  | ---------------- | - | ---- | ------------ | -------------------- | ---------------- | - | -------------------- | ----------------- | - |  | ------------ |  | ---------------- | - |  | ------- | -
|                                                   |  | 2009             |   | 2010 |              | Increase /(Decrease) |                  |   | Increase /(Decrease) |                  
|                                                   |  | Rs.(in millions) |   |      | % ofrevenues |                      | Rs.(in millions) |   |                      | US $(in millions) |   |  | % ofrevenues |  | Rs.(in millions) |   |  | %       |  
|Revenues                                           |  | 97,295           |   |      | 100.00       |                      | 106,080          |   |                      | 2,360             |   |  | 100.00       |  | 8,785            |   |  | 9.03    |  
|Operating costs                                    |  | (92,638          | ) |      | 95.22        |                      | (107,643         | ) |                      | (2,395            | ) |  | 101.47       |  | 15,005           |   |  | 16.20   |  
|Non-operating income, net                          |  | 3,019            |   |      | 3.10         |                      | 180              |   |                      | 4                 |   |  | 0.17         |  | (2,839           | ) |  | (94.04  | )
|Income tax (expense) / benefit                     |  | (2,430           | ) |      | 2.50         |                      | 969              |   |                      | 22                |   |  | 0.91         |  | (3,399           | ) |  | (139.88 | )
|Dividend tax                                       |  | (218             | ) |      | 0.22         |                      | (218             | ) |                      | (5                | ) |  | 0.21         |  |                 |   |  |        |  
|Share in net loss of equity method investees       |  | (1,120           | ) |      | 1.15         |                      | (3,192           | ) |                      | (71               | ) |  | 3.01         |  | 2,072            |   |  | 185.00  |  
|Net income attributable to noncontrolling interest |  | (22              | ) |      | 0.02         |                      | (12              | ) |                      |                  |   |  | 0.01         |  | (10              | ) |  | (45.45  | )
|Net income (loss)                                  |  | 3,886            |   |      | 4.00         |                      | (3,836           | ) |                      | (85               | ) |  | 3.62         |  | (7,722           | ) |  | (198.71 | )



36



---

##### Table of Contents

Revenues

The following table sets forth information regarding the Companys revenues for the fiscal years ended March 31, 2009 and 2010:



|                                          |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|----------------------------------------- |  | ---------------- |  | ---------------- |  | -------------------- |  | ---------------- | -------------------- |  | ------ | -
|                                          |  | 2009             |  | 2010             |  | Increase /(Decrease) |  |                  | Increase /(Decrease) | 
|                                          |  | Rs.(in millions) |  | Rs.(in millions) |  | US $(in millions)    |  | Rs.(in millions) |                      |  | %      |  
|Telephone:                                |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|International long distance (ILD)       |  | 50,207           |  | 56,855           |  | 1,265                |  | 6,648            |                      |  | 13.24  |  
|National long distance (NLD)            |  | 5,658            |  | 4,305            |  | 96                   |  | (1,353           | )                    |  | (23.91 | )
|Corporate data transmission:              |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|Leased circuits and IRUs                  |  | 12,365           |  | 13,125           |  | 292                  |  | 760              |                      |  | 6.15   |  
|Frame relay and MDNS services             |  | 814              |  | 348              |  | 8                    |  | (466             | )                    |  | (57.25 | )
|Internet leased lines                     |  | 5,549            |  | 4,448            |  | 99                   |  | (1,101           | )                    |  | (19.84 | )
|Internet (including Corporate IP Transit) |  | 9,114            |  | 9,472            |  | 211                  |  | 358              |                      |  | 3.93   |  
|Other                                     |  | 13,588           |  | 17,527           |  | 389                  |  | 3,939            |                      |  | 28.99  |  
|Total                                     |  | 97,295           |  | 106,080          |  | 2,360                |  | 8,785            |                      |  | 9.03   |  

Telephone

ILD Revenue

ILD is the
single largest revenue stream of the Company53.60% and 51.60% of revenues in fiscal years 2010 and 2009, respectively. Globally, during fiscal 2010, there were further reductions in tariff and interconnect rates, increasing the downward
pressure on margins and revenues. However, this downward pressure was counterbalanced by traffic volumes continuing to increase. Globally, the Company continues to focus on increasing volumes and thus revenues, while cutting costs to improve
margins. During fiscal 2010, globally, Tata Communications carried 32.6 billion minutes of international voice traffic, a growth of about 30% over the previous fiscal year. Traffic to and from India has grown from about 8.37 billion minutes in
fiscal 2009 to about 9.76 billion minutes in fiscal 2010. Increasing competition is expected to shrink the Companys addressable market and hence affect this business adversely. Management believes that the Companys scale, global reach,
innovative solutions, expertise and strong business relationships give it the capability to compete successfully in this space. In June 2009, the Company through its wholly-owned indirect subsidiary, Tata Communications (UK) Ltd., entered into a
major global voice outsourcing strategic agreement with the British Telecom Plc. The 5-year agreement allows Tata Communications and BT to mutually benefit from shared resources as part of a global supply arrangement. Under the terms of the
agreement, the Company became BTs exclusive supplier of International Direct Dial (IDD) outside BTs own footprint countries (excluding some specific key accounts) and BT became Tata Communications IDD sales channel for its
non-major and non-strategic accounts in the UK. This sales channel could be expanded into a few other European countries if BT achieves pre-established targets in the UK. This agreement represented approximately 6 billion minutes per year that the
Company will manage on behalf of BT, representing approximately a 20% increase of the Companys voice traffic volumes in fiscal 2009.



37



---

##### Table of Contents

NLD Revenue

NLD is a revenue stream that is generated by the Companys India operations. NLD volumes have decreased by 5% in fiscal 2010 over fiscal 2009.
Revenues decreased by approximately 24% in fiscal 2010 over fiscal 2009 due to a decrease in volumes. Major telecom operators in India have been rolling out their own networks across India. As these operators start carrying more traffic on their own
networks, the Companys addressable market continues to shrink. Net revenues per minute have decreased to Rs. 0.25 in fiscal 2010 as compared to Rs. 0.26 in fiscal 2009.

The Companys NLD traffic fell by over 5% from 10.04 billion minutes in fiscal 2009 to 9.51 billion minutes in fiscal 2010. Increased competition
through the issue of new NLD licences, along with other regulatory initiatives, has reduced the gap between NLD and local tariffs. Continued shrinkage in the Companys addressable market and falling tariffs is expected to affect this business.
The Company has a strong network infrastructure and interconnect agreements with all basic and cellular mobile service operators in India to carry NLD traffic to and from their networks. However, Tata Communications is dependent on getting traffic
from these access providers, many of whom have acquired their own NLD licences. Meanwhile, direct customer access mechanisms, such as the CAC, have not yet been implemented. During the year, the DoT reviewed the long pending consultation process for
the implementation of CAC and eventually recalled the CAC directive and recommended calling cards operated by NLD/ILD operators as an alternative to the CAC. These recommendations have been accepted by the DoT which will enable the Company to enter
the retail long distance calling card market. While increased competition in the long distance space affects our business, it also opens up opportunities to share the Companys network infrastructure with new licensees. The DoT has permitted
sharing of active infrastructure. The DoT is yet to accept TRAIs recommendation to introduce unrestricted Internet Telephony, particularly PSTN interconnection in India. This may provide new avenues for the Company in the NLD business area,
although margins maybe low.

Corporate Data Transmission

Leased Circuits and IRUs Revenue

Revenue from leased circuits (international and national) and IRUs, which form a substantial part of the revenue generated by our Enterprise and Carrier
Data segment, increased by 6.15% during fiscal 2010 over fiscal 2009. The increase was predominantly on account of growth in revenues from other service providers and the addition of new circuits. These services contributed approximately 12.37% and
12.71% in fiscals 2010 and 2009, respectively, of the Companys total revenues.

Frame Relay and MDNS Services Revenue

Revenue from frame relay and MDNS services were Rs. 814 million and Rs. 348 million for fiscal 2009 and 2010, respectively. For
fiscal 2010, we have seen a decline in revenues to the extent of Rs. 466 million (57.25%) over fiscal 2009 revenues because of customers moving to other products and services which are technologically and commercially more efficient. We
therefore expect revenues from these services to decline going forward.

Internet Leased Lines Revenue

Revenues from internet leased lines decreased by approximately 19.84% in fiscal 2010 as compared to fiscal 2009 due to low demand for high-speed dedicated
internet access by enterprise customers and steep pricing reductions.

Internet Revenue

Internet revenues increased by 3.93% in fiscal 2010 over fiscal 2009. Internet revenues include revenues from retail dial-up and broadband services
offered by the Company in India, services offered by TCISL and corporate IP transit services offered by the Company across the globe. Corporate IP transit services revenues increased to approximately Rs. 6, 201 million in fiscal 2010 from Rs.
5,615 million in fiscal 2009 due to an increase in revenues from other service providers. The Company is the #8 Tier-1 IP Provider in the world.

Broadband revenues have increased to Rs. 2,158 million in fiscal 2010 from Rs. 2,032 million in fiscal 2009 due to our focus on customers from
whom the Company generates higher revenues.The Company continues to focus on broadband services to small and medium businesses across India and plans to strengthen its product, delivery and customer service in this domain. The tariffs in the
broadband business will continue to be under pressure due to increased competition in this space.



38



---

##### Table of Contents

Other Revenue

Other revenue increased by 29% in fiscal 2010 over fiscal 2009 due to an increase in revenues of VPN, data centre services, Global roaming, ethernet,
hosting and O&M services. VPN revenues have grown to Rs. 2,008 million in fiscal 2010 from Rs. 1,634 million in fiscal 2009. IDC revenues have grown to Rs. 2, 389 million in fiscal 2010 from Rs. 1,954 million in fiscal 2009.
Global roaming services contributed Rs. 3,184 million in fiscal 2010 as against Rs. 2,716 million in fiscal 2009. Hosting, Ethernet, TV uplinking O&M revenue contributed Rs. 4,479 million in fiscal 2010 as against Rs.
2,571 million in fiscal 2009. Revenue from these services accounted for 16.52% of the Companys total revenue in fiscal 2010 as compared to 13.97% in fiscal 2009.

Operating Costs

The
following table sets forth information regarding of the Companys operating costs for the fiscal years ended March 31, 2009 and 2010.



|                                                              |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|------------------------------------------------------------- |  | ---------------- |  | ---------------- |  | -------------------- |  | ---------------- | -------------------- |  | ------ | -
|                                                              |  | 2009             |  | 2010             |  | Increase /(Decrease) |  |                  | Increase /(Decrease) | 
|                                                              |  | Rs.(in millions) |  | Rs.(in millions) |  | US $(in millions)    |  | Rs.(in millions) |                      |  | %      |  
|Network and transmission costs                                |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|Interconnect charges                                          |  | 48,875           |  | 58,965           |  | 1,311                |  | 10,090           |                      |  | 20.64  |  
|Rent of landlines                                             |  | 302              |  | 249              |  | 6                    |  | (53              | )                    |  | (17.55 | )
|Space segment utilization charges                             |  | 318              |  | 256              |  | 6                    |  | (62              | )                    |  | (19.50 | )
|Other transmission costs                                      |  | 1,706            |  | 1,982            |  | 44                   |  | 276              |                      |  | 16.18  |  
|Total                                                         |  | 51,201           |  | 61,452           |  | 1,367                |  | 10,251           |                      |  | 20.02  |  
|License fees                                                  |  | 863              |  | 794              |  | 18                   |  | (69              | )                    |  | (8.00  | )
|Other operating costs including depreciation and amortization |  | 40,574           |  | 45,397           |  | 1,010                |  | 4,823            |                      |  | 11.89  |  
|Total operating costs                                         |  | 92,638           |  | 107,643          |  | 2,395                |  | 15,005           |                      |  | 16.20  |  

Network and Transmission Costs

Network and transmission costs increased by 20.02% in fiscal 2010 over fiscal 2009. As a percentage of revenue, network and transmission costs increased
to 57.93% in fiscal 2010 from 52.62% in fiscal 2009. The increase in fiscal 2010 was primarily because of increased ILD traffic and the addition of new services.

Interconnect charges increased by 20.64% in fiscal 2010 as against an increase of 10.87% in fiscal 2009. As a percentage of revenue, interconnect charges
increased from approximately 50.23% in fiscal 2009 to 55.59% in fiscal 2010. The increase in fiscal 2010 was mainly due to the growth in ILD traffic. The Company now operates in global markets where the pricing of its products and services is
extremely competitive, impacting the cost to revenue ratio.

In fiscal 2010, rent of landlines decreased significantly as against fiscal 2009
because of a decrease in off-net charges consequent to a decrease in E1s (2MBPS circuits) leased by the Company (19,799 E1s in fiscal 2010 as against 23,244 E1s in fiscal 2009). As a percentage of revenue, rent of landlines decreased from 0.31% in
fiscal 2009 to 0.23% in fiscal 2010.

The Company continues to rationalize its space segment utilization charges by surrendering surplus
capacity and utilizing its fibre optic cable infrastructure for carrying voice and data traffic. The space segment utilization charges have decreased by 19.50% in fiscal 2010 as against an increase of 7.07% in fiscal 2009. As a percentage of
revenue, space segment utilization charges decreased from 0.33% in fiscal 2009 to 0.24% in fiscal 2010 due to such cost rationalization.

License Fees

The
license fee payable by the Company to the DoT is 6% of adjusted gross revenues (AGR). The Government of India defines AGR as gross call revenues less access charges actually paid to other carriers for carrying calls less service and
sales taxes paid to the Government of India. As explained under Item 4 above, we have certain disputes with the Government of India over the calculation of AGR and therefore of license fees. The total amounts provided towards ILD, NLD and ISP
licenses for fiscals 2010 and 2009 were Rs. 785 million and Rs. 824 million, respectively.



39



---

##### Table of Contents

As part of the compensation to the Company for the early termination of its exclusivity in providing ILD
services, the Government of India provided that the Company would be refunded 10% of the license fees it paid towards NLD services. Accordingly, the Company has taken a net charge of 5% of the revenues from NLD services in its financial statements
and recorded a receivable from the Government of 10% of the license fees. Out of the total claim of Rs. 802.80 million, Rs. 793.10 million was reimbursed by the DoT. The balance of the claim of Rs. 9.70 million is pending with
the DoT. The Company has requested that the DoT refund the balance of the claim.

Other Operating Costs

Other operating costs increased by 11.89% in fiscal 2010 over fiscal 2009. As a percentage of revenue, total other operating costs marginally increased
from 41.70% in fiscal 2009 to 42.80% in fiscal 2010. The increase in fiscal 2010 is primarily due to our infrastructure roll-out and organizational growth. Increases in some of the components of other operating costs were as follows:



| |  |  | Depreciation and amortization charges increased from Rs. 10,180 million in fiscal 2009 to Rs. 14,074 million in fiscal 2010. Due to an
increase in the Companys gross block of PP&E from Rs. 112,993 million in fiscal 2009 to Rs. 133,765 million in fiscal 2010, there was a corresponding increase in depreciation. The effective rate of depreciation on PP&E was
8.29% and 9.72% in fiscal 2009 and fiscal 2010, respectively. Because of investments in undersea cable assets, data centres, rollout of NLD and MAN networks and other PP&E, the Company expects its depreciation charge to continue to increase in
the foreseeable future.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Manpower costs constituted about 28.29% and 27.79% of other operating costs in fiscal 2010 and fiscal 2009, respectively. These costs increased by
13.90% in fiscal 2010 as against an increase of 28.26% in fiscal 2009. The increase in fiscal 2010 was primarily due to an increase in manpower and normal increments. As of March 31, 2010, the Company had a total of 6,457 employees, of which 5,
275 employees (82%) were based in India. Outsourced manpower costs decreased by 12.37% from Rs. 2, 362 million in fiscal 2009 to Rs. 2, 070 million in fiscal 2010. Outsourced manpower costs constituted about 4.56% and 5.82% of other
operating costs in fiscal 2010 and fiscal 2009.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Repairs and maintenance costs constituted about 10.10% and 12.80% of other operating costs in fiscal 2010 and fiscal 2009, respectively. These costs
decreased by 11.70% in fiscal 2010 and increased by 17.54% in fiscal 2009 due to a decrease in repairs and maintenance charges on plants and machinery in the current year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Legal and professional fees constituted 2.04% and 2.18% of other operating costs in fiscal 2010 and fiscal 2009, respectively. These costs increased by
4.83% in fiscal 2010 and decreased by 81.83% in fiscal 2009. In fiscal 2010 the amount was higher due to the Companys increased operations outside India.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-Operating Income

The following table sets forth information regarding the Companys non-operating income for the fiscal years ended March 31, 2009 and 2010:



|                                                    |  |                  |   |  |                  |   |  |                      |   |  |                      |   |  |         |  
|--------------------------------------------------- |  | ---------------- | - |  | ---------------- | - |  | -------------------- | - |  | -------------------- | - |  | ------- | -
|                                                    |  | 2009             |   |  | 2010             |   |  | Increase /(Decrease) |   |  | Increase /(Decrease) |  
|                                                    |  | Rs.(in millions) |   |  | Rs.(in millions) |   |  | US$(in millions)     |   |  | Rs.(in millions)     |   |  | %       |  
|Gain on sale of investments (net)                   |  | 4,289            |   |  | 347              |   |  | 8                    |   |  | (3,942               | ) |  | (91.91  | )
|Interest income / (expense) net                     |  | (2,241           | ) |  | (1,332           | ) |  | (29                  | ) |  | (909                 | ) |  | (40.56  | )
|Dividend income                                     |  | 225              |   |  | 2                |   |  |                     |   |  | (223                 | ) |  | (99.11  | )
|Foreign exchange gains / (loss) (net)               |  | (76              | ) |  | 43               |   |  | 1                    |   |  | (119                 | ) |  | (156.58 | )
|Liabilities not required to be settled written back |  | 228              |   |  | 304              |   |  | 6                    |   |  | 76                   |   |  | 33.33   |  
|Other income                                        |  | 594              |   |  | 816              |   |  | 18                   |   |  | 222                  |   |  | 37.37   |  
|Total                                               |  | 3,019            |   |  | 180              |   |  | 4                    |   |  | (2,839               | ) |  | (94.04  | )



40



---

##### Table of Contents

Gain on Sale of Investments

The gain on sale of investments was Rs. 347 million and Rs. 4,289 million in fiscal 2010 and 2009 respectively. In fiscal 2009, the gain on sale
of investments included a gain on the sale of our partial investment in shares of Tata Teleservices Limited amounting to Rs. 3,904 million. In fiscal 2010, the gain on sale of investments was primarily from the sale of mutual fund investments.

Interest Income/Expense (Net)

Net interest represents the net interest accrued by the Company on its bank and other deposits and borrowings under its overdraft facilities. Interest
income from banks and others increased to Rs. 673 million in fiscal 2010 from Rs. 491 million in fiscal 2009 on account of loans given to SEPCO/Neotel. During fiscal 2010, the Company had interest expense of Rs.
4,188 million on short-term and long-term debt as against Rs. 2,732 million in fiscal 2009. The increase was mostly because of an increase in the margin on our dollor borrowings and an increase in our rupee debt. In fiscals 2010 and 2009,
the Company had interest income on income tax refunds of Rs. 2,183 million and Rs. Nil related to India operations, respectively.

Dividend Income

Investments in mutual funds were in debt funds whose return was linked to interest rate movements. In fiscal 2010, the investments were made in growth
schemes, instead of dividend schemes. The impact of a dividend is realized at the time of the sale of the investment. Hence, the dividend income earned on investments in mutual funds has decreased.

Other Income

Other
income of Rs. 816 million (US$ 18 million) in fiscal 2010 included rental and space sharing income of Rs. 246 million (US$5 million), interest income from customers, return of capital and scrap sales income of Rs. 98 million
(US$2 million). In fiscals 2010 and 2009, other income included rental and space sharing income of Rs. 246 million (US$5 million) and Rs.249 million, respectively.

Income Tax Expense

The
Companys effective tax rate on a consolidated basis was (70.06%) in fiscal 2010 as against 31.66% in fiscal 2009. The statutory income tax rates in India were 33.99% for fiscal 2010 and 33.99% for fiscal 2009. Fiscal 2010s income
tax benefit of Rs. 969 million was comprised of Rs. 1,831 million relating to tax expense and Rs. 2,800 million relating to excess tax provisions written back by the Company. The Company incurred tax expense of Rs. 1,831 million since
Companys operations outside of India incurred losses which could not be set-off against the profits earned by the Companys operations within India. The excess income tax provisions written back amounting to Rs. 2,800 million was
attributable to the receipt of a favourable order by the Company from Income Tax Appellate Tribunal (ITAT) pertaining to the reimbursement of the DOT levy for fiscal 1994. After going through the records produced, ITAT held that the
relevant provisions of the law for reopening of the assessment has not been followed by the Income Tax Department (ITD) and therefore quashed the reassessment order summarily. Against the said order of the ITAT, the ITD has filed an
appeal before the High Court which is yet to come up for hearing. Under the Indian tax laws, ITAT is the highest fact finding authority in the judicial hierarchy and hence judicial decisions given by ITAT based on the facts are generally not
interfered with by the High Court, being next higher judicial authority. The Company therefore believes that the appeal filed by the ITD before the High Court is unlikely to be decided in favour of the ITD by the highest judicial
authority. Based on such judicial analysis and the favourable opinions of the legal counsels, the Company believes that no provision is required to be retained in the books for covering the aforesaid liability and consequently, the Company has
written back the corresponding excess tax provision of Rs. 2,800 million.

The Companys effective tax rate in fiscal 2010 was (70.06%)
as against (33.99%) due to excess tax provisions written back on account of receipt of a favourable order by the Company from ITAT pertaining to fiscal 1994.

In fiscal 2007, the Company commenced its analysis under Section 382 of the US Internal Revenue Code to ascertain the amount of operating loss in
respect of a subsidiary of Teleglobe International Holdings Ltd (TIHL) that will be available for future utilization consequent to the acquisition of TIHL by the Company in fiscal 2006. In fiscal 2008, deferred tax assets and corresponding valuation
allowances of Rs. 2,605 million were written-off as the Company concluded that these deferred tax assets were not available for future utilization. The above write-off did not have an impact on the income statement as there was an equal but
opposite movement in valuation allowance.

An unfavorable outcome in the future on the tax disputes in respect of its tax holiday claim under
Section 80-IA, claim for capital loss on sale of ICO Global, reimbursement of the DoT levy by Government of India and penalties would negatively affect the Companys results of operations by Rs. 6,275 million, Rs.1, 077 million,
Rs. 5,530 million and Rs.6, 871 million, respectively.



41



---

##### Table of Contents

Taxes and interest relating to these tax disputes (other than penalties), wherever the same have been
sustained against the Company, have been paid in full and classified as advance income taxes on the balance sheet. Penalties of Rs. 6,861 million (out of a total Rs. 6,871 million of penalties imposed by the tax authorities) have also been
paid, which may result in an additional future payment of up to Rs. 10 million if the Company is unsuccessful in all of its significant tax disputes.

The Company continues to be subject to other significant claims by the revenue authorities in respect of income tax matters. These are described under
Item 8Legal Proceedings.

Share in Net Loss of Equity Method Investees

During fiscals 2009 and 2010, Tata Communications equity ownership interest in United Telecom Limited (UTL) was 26.66% and in SEPCO
Communications Pty. Ltd (SEPCO) was 43.16%. SEPCO is an investment company which owns 51% of the equity of Neotel (Pty) Ltd, a company which provides basic telecommunication services in South Africa.

On January 19, 2009, the Company directly acquired an additional 27% equity ownership interest in Neotel.

The Companys share in the net loss of equity method investees in fiscal 2010 was Rs. 3,192 million (US$ 71 million) as compared to Rs
1,120 million in fiscal 2009 because the Companys share in the net losses from Neotel and SEPCO has increased from Rs.890 million in fiscal 2009 to Rs 3,197 million (US$ 71 million) in fiscal 2010. Neotel is currently in its
network and customer reach expansion phase which has resulted in the losses. As the business scale of Neotel increases, the Company expects the losses from Neotel to reduce.

Fiscal Year 2009 Compared to Fiscal Year 2008

The following table sets forth information regarding the Companys net income for the fiscal years ended March 31, 2008 and 2009:



|                                                   |  |                  |   |  |              |   |                      |                  |                      |  |                   |   |  |              |  |                  |  |         
|-------------------------------------------------- |  | ---------------- | - |  | ------------ | - | -------------------- | ---------------- | -------------------- |  | ----------------- | - |  | ------------ |  | ---------------- |  | --------
|                                                   |  | 2008             |   |  | 2009         |   | Increase /(Decrease) |                  | Increase /(Decrease)
|                                                   |  | Rs.(in millions) |   |  | % ofrevenues |   |                      | Rs.(in millions) |                      |  | US $(in millions) |   |  | % ofrevenues |  | Rs.(in millions) |  | %       
|Revenues                                           |  | 82,331           |   |  | 100.00       |   |                      | 97,295           |                      |  | 1,913             |   |  | 100.00       |  | 14,964           |  | 18.18   
|Operating costs                                    |  | (82,123          | ) |  | 99.74        |   |                      | (92,638          | )                    |  | (1,821            | ) |  | 95.22        |  | 10,515           |  | 12.80   
|Non-operating income, net                          |  | 710              |   |  | 0.86         |   |                      | 3,019            |                      |  | 59                |   |  | 3.10         |  | 2,309            |  | 325.21  
|Income tax expense                                 |  | (1,280           | ) |  | 1.55         |   |                      | (2,430           | )                    |  | (48               | ) |  | 2.50         |  | 1,150            |  | 89.84   
|Dividend tax                                       |  | (218             | ) |  | 0.26         |   |                      | (218             | )                    |  | (5                | ) |  | 0.22         |  |                 |  |        
|Share in net loss of equity method investees       |  | (393             | ) |  | 0.48         |   |                      | (1,120           | )                    |  | (22               | ) |  | 1.15         |  | 727              |  | 184.99  
|Net income attributable to noncontrolling interest |  | (1               | ) |  |             |   |                      | (22              | )                    |  |                  |   |  | 0.02         |  | 21               |  | 2,100.00
|                                                   |  |                  |   |  |              |   |                      |                  |                      |  |                   |   |  |              |  |                  |  |         
|Net income                                         |  | (974             | ) |  | (1.17        | ) |                      | 3,886            |                      |  | 76                |   |  | 4.00         |  | 4,860            |  | 498.97  
|                                                   |  |                  |   |  |              |   |                      |                  |                      |  |                   |   |  |              |  |                  |  |         

Revenues

The following table sets forth information regarding the Companys revenues for the fiscal years ended March 31, 2008 and 2009:



|                                          |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|----------------------------------------- |  | ---------------- |  | ---------------- |  | -------------------- |  | ---------------- | -------------------- |  | ------ | -
|                                          |  | 2008             |  | 2009             |  | Increase /(Decrease) |  |                  | Increase /(Decrease) | 
|                                          |  | Rs.(in millions) |  | Rs.(in millions) |  | US $(in millions)    |  | Rs.(in millions) |                      |  | %      |  
|Telephone:                                |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|International long distance (ILD)       |  | 46,687           |  | 50,207           |  | 987                  |  | 3,520            |                      |  | 7.54   |  
|National long distance (NLD)            |  | 3,767            |  | 5,658            |  | 111                  |  | 1,891            |                      |  | 50.20  |  
|Corporate data transmission:              |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|Leased circuits and IRUs                  |  | 10,998           |  | 12,365           |  | 243                  |  | 1,367            |                      |  | 12.43  |  
|Frame relay and MDNS services             |  | 932              |  | 814              |  | 16                   |  | (118             | )                    |  | (12.66 | )
|Internet leased lines                     |  | 4,796            |  | 5,549            |  | 110                  |  | 753              |                      |  | 15.70  |  
|Internet (including Corporate IP Transit) |  | 7,844            |  | 9,114            |  | 179                  |  | 1,270            |                      |  | 16.19  |  
|Other                                     |  | 7,307            |  | 13,588           |  | 267                  |  | 6,281            |                      |  | 85.96  |  
|                                          |  |                  |  |                  |  |                      |  |                  |                      |  |        |  
|Total                                     |  | 82,331           |  | 97,295           |  | 1,913                |  | 14,964           |                      |  | 18.18  |  
|                                          |  |                  |  |                  |  |                      |  |                  |                      |  |        |  



42



---

##### Table of Contents

Telephone

ILD Revenue

ILD is the
single largest revenue stream of the Company51.60% and 56.71% of revenues in fiscal years 2009 and 2008, respectively. Globally, during fiscal 2009, there were further reductions in tariff and interconnect rates, increasing the downward
pressure on margins and revenues. However, to an extent, this downward pressure was counterbalanced by traffic volumes continuing to increase. Globally, the Company continues to focus on increasing volumes and thus revenues, while cutting costs to
improve margins. During fiscal 2009, globally, Tata Communications carried 25 billion minutes of international voice traffic, a growth of about 7% over the previous fiscal year. Traffic to and from India has grown from about 6.86 billion minutes in
fiscal 2008 to about 8.37 billion minutes in fiscal 2009. Increasing competition is expected to shrink the Companys addressable market and hence affect this business adversely. Management believes that the Companys scale, global reach,
innovative solutions, expertise and strong business relationships give it the capability to compete successfully in this space.

NLD Revenue

NLD is a
revenue stream that is generated by the Companys India operations. NLD volumes have increased by 43% in fiscal 2009 over fiscal 2008. Apart from increasing the Companys overall revenues, the NLD business has helped the Company reduce
costs by reducing its dependence on other NLD operators for domestic connectivity because of increased capital expenditures to enhance the domestic network. The Company is able to carry increased volumes due to a larger network reach and increased
points of interconnect with other service providers. Revenues increased by approximately 50% in fiscal 2009 over fiscal 2008 due to the growth in volumes. Net revenues per minute have increased to Rs. 0.26 in fiscal 2009 as compared to Rs. 0.24 in
fiscal 2008.

Increased mobile penetration has resulted in significant growth in NLD traffic within India. The Companys NLD traffic has
grown by over 43% from 7.01 billion minutes in fiscal 2008 to 10.04 billion minutes in fiscal 2009. Increased competition through the issue of new NLD licences, along with other regulatory initiatives, has reduced the gap between NLD and local
tariffs. Continued shrinkage in the Companys addressable market and falling tariffs is expected to affect this business. The Company has a strong network infrastructure and interconnect agreements with all basic and cellular mobile service
operators in India to carry NLD traffic to and from their networks. However, Tata Communications is dependent on getting traffic from these access providers, many of whom have acquired their own NLD licences. Meanwhile, direct customer access
mechanisms, such as the CAC, have not yet been implemented. During the year, the DoT reviewed the long pending consultation process for the implementation of CAC and eventually recalled the CAC directive and recommended calling cards operated by
NLD/ILD operators as an alternative to the CAC. These recommendations have been submitted to the DoT and are awaiting acceptance and further directions from the DoT. Any such implementation will enable the Company to enter the retail long distance
market. While increased competition in the long distance space affects our business, it also opens up opportunities to share the Companys network infrastructure with new licensees. The DoT has recently permitted sharing of active
infrastructure. The DoT has also initiated a consultation process for the introduction of internet telephony in the NLD sector. This may provide new avenues for the Company in the NLD business area, although the margins are low.

Corporate Data Transmission

Leased Circuits and IRUs Revenue

Revenue from leased circuits (international and national) and IRUs, which form a substantial part of the revenue generated by our Enterprise and Carrier
Data segment, increased by 12.43% during fiscal 2009 over fiscal 2008. The increase was on account of growth of IT, IT-enabled services, financial markets and outsourcing services in India. These services contributed approximately 12.71% and 13.36%
in fiscals 2009 and 2008, respectively, of the Companys total revenues. The Company expects the product mix of these services to move from a fixed connectivity scenario to usage-based revenue in select customer segments.

Frame Relay and MDNS Services Revenue

Revenue from frame relay and MDNS services were Rs. 932 million and Rs. 814 million for fiscal 2008 and 2009, respectively. For fiscal 2009, we
have seen a decline in revenues to the extent of Rs. 118 million (12.66%) over fiscal 2008 revenues because of customers moving to other products and services which are technologically and commercially more efficient. We therefore expect
revenues from these services to decline going forward.

Internet Leased Lines Revenue

Revenues from internet leased lines increased by approximately 15.70% in fiscal 2009 over fiscal 2008 due to increased demand for high-speed dedicated
internet access by enterprise customers. The growth was primarily driven by the Companys India operations. The Company expects the volume growth in these services to get offset to some extent due to pricing pressures going forward.



43



---

##### Table of Contents

Internet Revenue

The growth in broadband subscribers has been slower than anticipated, primarily due to limited availability of quality last-mile networks capable of
delivering the bandwidth necessary for broadband. To overcome the last-mile connectivity problem, the Company has rolled out its own wireless networks based on Wi-Max technologies in Bangalore, Delhi, NCR, Chandigarh and Hyderabad. Wi-fi services
are an important supplement to the Companys internet access services. Through its partnership with global internet service providers and aggregators, the Company now offers its customers global internet roaming service in over 160 countries.

Internet revenues increased by 16.19% in fiscal 2009 over fiscal 2008. Internet revenues include revenues from retail dial-up and broadband
services offered by the Company in India, services offered by TCISL and corporate IP transit services offered by the Company across the globe. Corporate IP transit services revenues increased to approximately Rs. 5,615 million in fiscal 2009
from Rs. 3,660 million in fiscal 2008.

Broadband revenues have increased to Rs. 2,032 million in fiscal 2009 from Rs.
1,703 million in fiscal 2008 due to our focus on customers from whom the Company generates higher revenues. The Company continues to focus on broadband services across India and plans to strengthen its product, delivery and customer service in
this domain. The tariffs in the broadband business will continue to be under pressure due to increased competition in this space.

Other Revenue

Other
revenue increased by 85.96% in fiscal 2009 over fiscal 2008 primarily due to the increase in revenues of VPN and data centre services. VPN revenues have grown to Rs. 1,634 million in fiscal 2009 from Rs. 1,009 million in fiscal 2008. IDC
revenues have grown to Rs. 1,954 million in fiscal 2009 from Rs. 1,072 million in fiscal 2008. Global roaming services contributed Rs. 2,716 million in fiscal 2009 as against Rs. 2,037 million in fiscal 2008. Revenue
from these services accounted for 13.97% of the Companys total revenue in fiscal 2009 as compared to 8.88% in fiscal 2008.

Operating Costs

The
following table sets forth information regarding of the Companys operating costs for the fiscal years ended March 31, 2008 and 2009.



|                                                              |  |                   |  |                   |  |                      |  |                   |                      |  |        |  
|------------------------------------------------------------- |  | ----------------- |  | ----------------- |  | -------------------- |  | ----------------- | -------------------- |  | ------ | -
|                                                              |  | 2008              |  | 2009              |  | Increase /(Decrease) |  |                   | Increase /(Decrease) | 
|                                                              |  | Rs. (in millions) |  | Rs. (in millions) |  | US $ (in millions)   |  | Rs. (in millions) |                      |  | %      |  
|Network and transmission costs                                |  |                   |  |                   |  |                      |  |                   |                      |  |        |  
|Interconnect charges                                          |  | 44,084            |  | 48,875            |  | 961                  |  | 4,791             |                      |  | 10.87  |  
|Rent of landlines                                             |  | 969               |  | 302               |  | 6                    |  | (667              | )                    |  | (68.83 | )
|Space segment utilization charges                             |  | 297               |  | 318               |  | 6                    |  | 21                |                      |  | 7.07   |  
|Other transmission costs                                      |  | 1,367             |  | 1,706             |  | 33                   |  | 339               |                      |  | 24.80  |  
|Total                                                         |  | 46,717            |  | 51,201            |  | 1,006                |  | 4,484             |                      |  | 9.60   |  
|License fees                                                  |  | 848               |  | 863               |  | 17                   |  | 15                |                      |  | 1.77   |  
|Other operating costs including depreciation and amortization |  | 34,558            |  | 40,574            |  | 798                  |  | 6,016             |                      |  | 17.41  |  
|                                                              |  |                   |  |                   |  |                      |  |                   |                      |  |        |  
|Total operating costs                                         |  | 82,123            |  | 92,638            |  | 1,821                |  | 10,515            |                      |  | 12.80  |  
|                                                              |  |                   |  |                   |  |                      |  |                   |                      |  |        |  

Network and Transmission Costs

Network and transmission costs increased by 9.60% in fiscal 2009 over fiscal 2008. As a percentage of revenue, network and transmission costs decreased to
52.62% in fiscal 2009 from 56.74% in fiscal 2008. The decrease in fiscal 2009 was because of efficiencies obtained due to higher volumes.

Interconnect charges increased by 10.87% in fiscal 2009 as against decrease of 10.20% in fiscal 2008. As a percentage of revenue, interconnect charges
decreased from approximately 53.54% in fiscal 2008 to 50.23% in fiscal 2009. The decrease in fiscal 2009 was mainly due to the reduction in termination charges on wholesale voice services and the removal of ADC charges. The Company now operates in
global markets where the pricing of its products and services is extremely competitive, impacting the cost to revenue ratio.

In fiscal 2009,
rent of landlines decreased significantly as against fiscal 2008 because of a decrease in off-net charges consequent to decrease in 35,638 E1s (2MBPS circuits) in fiscal 2008 to E1s 23,244 in fiscal 2009. As a percentage of revenue, rent
of landlines decreased from to 1.18% in fiscal 2008 to 0.31% in fiscal 2009.



44



---

##### Table of Contents

The Company continues to rationalize its space segment utilization charges by surrendering surplus capacity
and utilizing its fibre optic cable infrastructure for carrying voice and data traffic. The space segment utilization charges have increased by 7.07% in fiscal 2009 as against a decrease of 49.04% in fiscal 2008. As a percentage of revenue, space
segment utilization charges decreased from 0.36% in fiscal 2008 to 0.33% in fiscal 2009 due to such cost rationalization.

License Fees

The
license fee payable by the Company to the DoT is 6% of adjusted gross revenues (AGR). The Government of India defines AGR as gross call revenues less access charges actually paid to other carriers for carrying of calls less service and
sales taxes paid to the Government of India. As explained under Item 4 above, we have certain disputes with the Government of India over the calculation of AGR and therefore of license fees. The total amounts provided towards ILD, NLD and ISP
licenses for fiscals 2009 and 2008 were Rs. 824 million and Rs. 821 million, respectively.

As part of the compensation to the
Company for the early termination of its exclusivity in providing ILD services, the Government of India provided that the Company would be refunded 10% of the license fees it paid towards NLD services. Accordingly, the Company has taken a net charge
of 5% of the revenues from NLD services in its financial statements and recorded a receivable from the Government of 10% of the license fees. Out of the total claim of Rs. 802.80 million, Rs. 793.10 million was reimbursed by the DoT.
The balance of the claim of Rs. 9.70 million is pending with the DoT. The Company has requested that the DoT refund the balance of the claim.

Other Operating Costs

Other operating costs increased by 17.41% in fiscal 2009 over fiscal 2008. As a percentage of revenue, total other operating costs marginally decreased
from 41.97% in fiscal 2008 to 41.70% in fiscal 2009. The increase in fiscal 2009 is primarily due to our infrastructure roll-out and organizational growth. Increases in some of the components of other operating costs were as follows:



| |  |  | Depreciation and amortization charges increased from Rs. 7,358 million in fiscal 2008 to Rs. 10,180 million in fiscal 2009. Because of
increase in capital expenditures from Rs. 39,460 million in fiscal 2008 to Rs. 47,328 million (US$ 930 million) in fiscal 2009, respectively, there was a corresponding increase in depreciation. The Companys net block of PP&E
increased from Rs. 74,084 million in fiscal 2008 to Rs. 103,713 million in fiscal 2009. The effective rate of depreciation on PP&E was 8.67% and 8.29% in fiscal 2008 and fiscal 2009, respectively. Because of investments in undersea
cable assets, data centres, rollout of WIMAX networks and other PP&E, the Company expects its depreciation charge to continue to increase in the foreseeable future.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Manpower costs constituted about 27.79% and 25.44% of other operating costs in fiscal 2009 and fiscal 2008, respectively. These costs increased by
28.26% in fiscal 2009 as against a decrease of 2% in fiscal 2008. The increase in fiscal 2009 was primarily due to an increase in manpower and normal increments. As of March 31, 2009, the Company had a total of 5,825 employees, of which 4,775
employees (82%) were based in India.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Repairs and maintenance costs constituted about 12.80% and 12.85% of other operating costs in fiscal 2009 and fiscal 2008, respectively. These costs
increased by 17.54% in fiscal 2009 and 4.42% in fiscal 2008 corresponding to increase in the asset base discussed above.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Legal and professional fees constituted 2.18% and 14.13% of other operating costs in fiscal 2009 and fiscal 2008, respectively. These costs decreased
by 81.83% in fiscal 2009 and increased by 249.21% in fiscal 2008. In fiscal 2008 the amount was higher due to the Companys increased operations outside India, dispute resolution and flag arbitration costs and restructuring and compliance
costs, described in more detail below.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Polargrid LLC, the initial bidder for TGN, brought suit against the
Company in December 2004 in the U.S. District Court for the Southern District of New York in connection with an alleged breach of contract between the parties, and subsequently amended its complaint to add additional claims. Polargrids
complaint sought in excess of US$1.5 billion in damages arising from the Companys alleged breach and other alleged violations of common law. In April 2008, the Company settled all outstanding claims by Polargrid for an amount of Rs.
680 million, which was accrued in fiscal 2008 and included as a one-time, non-recurring cost under other operating costs in the income statement and under accrued expenses and other current liabilities in the balance sheet. Under the terms of
our settlement with Polargrid, all claims and counterclaims in the New York federal action have been dismissed with prejudice, Polargrid ceased its opposition to the Tata Composite Scheme of Arrangement, and the parties released each other from all
related claims and covenant not to sue each other for related matters, including any matters related to the Tyco Global Network or Polarnet project.



45



---

##### Table of Contents

In fiscal 2008, the Company incurred Rs. 760 million of other operating costs and Rs.
69 million of interest expense, both of which were included under accrued expenses and other current liabilities on the balance sheet, in connection with the settlement of arbitration with Reliance Globalcom Limited (formerly known as
Flag Telecom). The outcome of the arbitration proceeding was unfavorable for the Company and as a result the Company incurred a liability for damages payable to Reliance Globalcom. In September 2008, the Company paid the liability
plus additional interest of Rs. 27 million for the period April 2008 to the date of settlement in September 2008. There were no such costs or related interest expense incurred in fiscal 2007.

Non-Operating Income

The following table sets forth information regarding the Companys non-operating income for the fiscal years ended March 31, 2008 and 2009:



|                                                    |  |                  |   |  |                  |   |  |                      |   |  |                      |   |  |           |  
|--------------------------------------------------- |  | ---------------- | - |  | ---------------- | - |  | -------------------- | - |  | -------------------- | - |  | --------- | -
|                                                    |  | 2008             |   |  | 2009             |   |  | Increase /(Decrease) |   |  | Increase /(Decrease) |  
|                                                    |  | Rs.(in millions) |   |  | Rs.(in millions) |   |  | US$(in millions)     |   |  | Rs.(in millions)     |   |  | %         |  
|Gain on sale of investments (net)                   |  | 145              |   |  | 4,289            |   |  | 84                   |   |  | 4,144                |   |  | 2,857.93  |  
|Interest income / (expense) net                     |  | (1,369           | ) |  | (2,241           | ) |  | (44                  | ) |  | 872                  |   |  | 63.70     |  
|Dividend income                                     |  | 317              |   |  | 225              |   |  | 4                    |   |  | (92                  | ) |  | (29.02    | )
|Foreign exchange gains (loss) (net)                 |  | 3                |   |  | (76              | ) |  | (1                   | ) |  | (79                  | ) |  | (2,633.33 | )
|Liabilities not required to be settled written back |  | 229              |   |  | 228              |   |  | 4                    |   |  | (1                   | ) |  | (0.44     | )
|Other income                                        |  | 1,385            |   |  | 594              |   |  | 12                   |   |  | (791                 | ) |  | (57.11    | )
|                                                    |  |                  |   |  |                  |   |  |                      |   |  |                      |   |  |           |  
|Total                                               |  | 710              |   |  | 3,019            |   |  | 59                   |   |  | 2,309                |   |  | 325.21    |  
|                                                    |  |                  |   |  |                  |   |  |                      |   |  |                      |   |  |           |  

Gain on Sale of Investments

The gain on sale of investments was Rs. 4,289 million and Rs. 145 million in fiscal 2009 and 2008. In fiscal 2009, the gain on sale of
investments included a gain on the sale of partial investment in shares of Tata Teleservices Limited amounting to Rs. 3,904 million. The balance was primarily a gain on the sale of mutual fund investments.

Interest Income/Expense (Net)

Net interest represents the net interest accrued by the Company on its bank and other deposits and borrowings under its overdraft facilities. Interest
income from banks and others increased to Rs. 491 million in fiscal 2009 from Rs. 100 million in fiscal 2008 on account of an increase in bank deposits and loans given. In fiscals 2009 and 2008, the Company received interest of
Rs. Nil and Rs. 167 million on income tax refunds on its India operations. During fiscal 2009, the Company had interest expense of Rs. 2,732 million on short-term and long-term debt as against Rs. 1,469 million in fiscal 2008. The
increase was because of the increase in the total debt of the Company.

Dividend Income

Investments in mutual funds were in debt funds whose return was linked to interest rate movement. In fiscal 2009 the interest rates have decreased when
compared to fiscal 2008. Hence, the dividend income earned on investments in mutual funds has decreased.

Other Income

Other income of Rs. 594 million (US$ 12 million) in fiscal 2009 included rental and space sharing income of Rs. 249 million
(US$5 million). Other income of Rs. 1,385 million in fiscal 2008 included Rs.278 million and Rs 162 million on account of license fees reimbursement from DoT and liabilities written back on dispute settlement respectively.

Income Tax Expense

The
Companys effective tax rate on a consolidated basis was 31.66% in fiscal 2009 as against 139.43% in fiscal 2008. The statutory income tax rates in India were 33.99% for fiscal 2009 and 33.99% for fiscal 2008. The net profit in fiscal 2009
constitutes of significant portion of the gain on sale of investments in Tata Teleservices Limited, which is taxed at the rate of 22.66% as against a statutory rate of 33.99%, therefore the Companys effective tax rate on consolidated basis was
lower in fiscal 2009 as against fiscal 2008. The effective tax rate in fiscal 2008 was higher than the statutory rate because the Companys operations outside of India incurred losses which could not be set off against the profits earned by the
Companys operations within India, thereby causing the effective rate on a consolidated basis to rise substantially.



46



---

##### Table of Contents

In fiscal 2007, the Company commenced its analysis under Section 382 of the US Internal Revenue Code to
ascertain the amount of operating loss in respect of a subsidiary of Teleglobe International Holdings Ltd (TIHL) that will be available for future utilization consequent to the acquisition of TIHL by the Company in fiscal 2006. In fiscal 2008,
deferred tax assets and corresponding valuation allowances of Rs. 2,605 million were written-off as the Company concluded that these deferred tax assets were not available for future utilization. The above write-off did not have an impact on
the income statement as there was an equal but opposite movement in valuation allowance.

In the event of a decision against the Company
relating to its tax holiday claim under Section 80-IA, claim for capital loss on sale of ICO Global shares, the reimbursement of levy by the Government of India and the related interest, and penalties will negatively affect the Companys
results of operations by Rs. 6,275 million, Rs. 1,077 million, Rs. 629 million and Rs. 8,175 million respectively.

Taxes
and interest relating to these tax disputes have been paid in full and classified as advance income taxes on the balance sheet. Penalties of Rs. 1,236 million (out of a total Rs. 8,175 million of penalties imposed by the tax authorities)
have also been paid, which may result in an additional future payment of up to Rs. 6,939 million if the Company is unsuccessful in all of its significant tax disputes.

The Company continues to be subject to other significant claims by the revenue authorities in respect of income tax matters. These are described under
Item 8Legal Proceedings.

Share in Net Loss of Equity Method Investees

During fiscals 2008 and 2009, Tata Communications equity ownership interest in United Telecom Limited (UTL) was 26.66% and in SEPCO
Communications Pty. Ltd (SEPCO) was 43.16%. SEPCO is an investment company which owns 51% of the equity of Neotel (Pty) Ltd, a company which provides basic telecommunication services in South Africa.

On January 19, 2009, the Company directly acquired an additional 27% equity ownership interest in Neotel.

The Companys share in the net loss of equity method investees in fiscal 2009 was Rs. 1,120 million (US$ 22 million) as compared to Rs.
393 million in fiscal 2008 because the Companys share in the net loss from SEPCO has increased from Rs 399 million in fiscal 2008 to Rs 1,117 million (US$ 22 million) in fiscal 2009. Rs. 1,117 million (US$ 22 million) in
fiscal 2009 included additional 27% equity ownership interest share of losses, which amounts to Rs. 142 million (US$ 3 million) post-acquisition.

Critical Accounting Policies

US GAAP

The
Company prepares its financial statements in accordance with Indian GAAP. US GAAP differs in certain material respects from Indian GAAP. Principal differences insofar as they relate to the Company include differences in the measurement basis
for acquisitions accounted for using the purchase method, valuation of investments, measurement and accounting for impairment loss of longlived assets, accounting for deferred income taxes, accounting for retirement benefits, compensated
absences, foreign exchange differences, financial instruments, proposed dividends and taxes thereon and the presentation and format of the financial statements and related notes.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the years presented. Management bases its
estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the
following critical accounting policies apply to and affect significant judgments and estimates used in the preparation of its consolidated financial statements.



47



---

##### Table of Contents

Useful lives of Property, Plant and Equipment (PP&E) and Other
Intangibles

We estimate the useful lives of property, plant and equipment and intangible assets in order to determine the amount of
depreciation and amortization expense to be recorded during any reporting period. Such estimated life is based on historical experience with similar assets or the fair valuation done at the time of acquisition, as well as taking into account
anticipated technological or other changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the
recognition of increased depreciation and amortization expense in future periods. The Companys intangible assets include customer relationships, computer software, license and spectrum costs. Customer relationships, computer software, license
and spectrum are amortized using the straight-line method, over the following estimated useful lives. The purchase of capacity on specified cables for a stated period of time which is substantially lower than the economic lives of the cables are
classified as an operating lease, and recognized as expense on a straight-line basis over the contracted period. Capacity purchase contracts which do not transfer the right to use any specific cable and do not identify capacity in a specific cable,
and under which the service provider can meet its obligation by routing the Companys traffic utilizing capacity in any of its cables depending on availability are accounted for as service contracts. Capacity expense under service contracts are
recognized on a straight-line basis over the contract period.

Impairment of Long-Lived Assets

The Company evaluates the carrying amount of its long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such
assets may not be recoverable. The Company subjects such assets to a test of recoverability based on the undiscounted cash flows from the use or disposition of such assets. If the carrying amount of the asset exceeds the undiscounted cash flows, the
Company recognizes an impairment loss measured as the amount by which the carrying amount of the long-lived asset exceeds the fair value. Assets to be disposed off are reported at the lower of the carrying value or the fair value less the cost to
sell. The undiscounted cash flows calculation uses various assumptions and estimates regarding future revenue, expenses and cash flows projections over the estimated remaining useful life of the asset or asset group. These forecasts are subject to
changes in external factors, including adverse regulatory and legal rulings. If the asset is impaired, we recognize an impairment loss, as the difference between the carrying amount and the fair value of the asset. The adjusted carrying amount is
the new cost basis.

Valuation of Goodwill

Goodwill is tested for potential impairment on an annual basis, which for the Company is performed on March 31 or in interim periods if events and
circumstances indicate a potential impairment. As reporting units are determined after an acquisition or evolve with changes in business strategy, goodwill is assigned and it may no longer retain its association with a particular transaction. All
revenue streams and related activities of a reporting unit, whether acquired or organic, are available to support the carrying amount of goodwill. The reporting units for impairment assessments are generally one level below the operating segment and
have been identified as international voice (included under the global voice services operating segment), broadband internet through optical fibre and broadband and dial-up internet (both included under the retail internet operating segment).

Under the applicable accounting standard, goodwill impairment analysis is a two-step test. The first step of the goodwill impairment test
compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying
amount of the reporting unit exceeds its fair value, the second step is performed. The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated possible impairment. The implied
fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of
the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. The adjustments to measure the assets, liabilities and intangibles at fair value are only for the purpose of
measuring the implied fair value of goodwill and these adjustments are not reflected in the consolidated balance sheet. If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no impairment. If the
goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss
establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted.

Estimating the fair value of
reporting units is a subjective process that requires significant estimates and assumptions, particularly related to cash flows and the appropriate discount rates. The fair values of the reporting units were determined using a valuation technique
consistent with the income approach. For the purpose of the income approach, internal forecasts were used to estimate the future cash flows (including a terminal value approach to estimate cash flows beyond the final year of the forecast) after
considering current economic conditions and trends, estimated future operating results and growth rates, anticipated future economic and regulatory conditions and the availability of necessary technology and network infrastructure. Due to the
inherent uncertainty involved in making those estimates, actual results could differ from the estimates. The Company evaluates the merits of each significant assumption, both individually and in the aggregate, used to determine the fair values of
the reporting units, as well as the fair values of the corresponding assets and liabilities within the reporting units, for reasonableness.



48



---

##### Table of Contents

Cash flows were discounted based on equity return rates. The Company believes that the discount rates used
adequately reflect the inherent risk in the businesses of the reporting units, uncertainty in the economic environment and the risks associated with the internally developed forecasts. Expected rates of equity returns were estimated based on
historical market returns for similar industries of the reporting units.

Legal claims against the Company

There are a number of legal proceedings covering a wide range of matters pending or threatened against us. We have accrued for loss
contingencies that are probable and where the loss amount can be reasonably estimated. The judgments we make with regard to whether to establish an accrual are based on an evaluation of all relevant factors by internal and external legal counsel, as
well as subject matter experts and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. Claims are continually monitored and revalued as new information is obtained. We may not establish
our liability for a particular matter until long after the litigation is filed, once a liability becomes probable and estimable. In respect of loss contingencies where the reliable estimate of loss is a range, the amount accrued is the better
estimate of the loss within the range and when no amount within the range is a better estimate than any other amount, the minimum amount in the range in accrued.

The actual settlement of such matters could differ from the judgments made in determining how much, if any, to accrue. We do not believe these
proceedings will have a material adverse effect on our consolidated financial results. While we believe that our accruals for these matters are adequate, if the actual loss from a loss contingency is significantly different than the estimated loss,
our results of operations may be over or understated.

Income Taxes

Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and probability
of realization of deferred income taxes and the timing of income tax payments. Deferred income taxes are provided for the effect of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and
the amounts recognized for income tax purposes. The Company measures deferred tax assets and liabilities using enacted tax rates that, if changed, would result in either an increase or decrease in the provision for income taxes in the period of
change. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. In assessing the likelihood of realization, management considers estimates of future taxable income, the character of income
needed to realize future tax benefits, and all available evidence. Income tax benefits from tax positions have been recognized only when it was more likely than not that the Company would be entitled to the economic benefits of the tax positions.
The more-likely-than-not threshold has been determined based on the technical merits that the position will sustain upon examination. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no
benefits of the tax position are recognized. Actual income taxes could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws, our financial condition and results of operations in future periods,
as well as final review of our tax returns by taxing authorities, which, as a matter of course, are regularly audited by the Indian and foreign tax authorities. Upon adoption of FIN 48, the variation on account of review could be minimized but may
not be altogether eliminated.

Accounting policy on uncertain tax positions

Uncertain tax positions are recognized using the more-likely-than-not threshold determined solely based on the technical merits that the tax positions
sustain upon examination. Tax positions that met the recognition threshold are measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with a taxing authority that has full knowledge of
all relevant information. Interest and penalties relating to uncertain tax positions are classified as income tax expense in the statement of operations and reduced from advance income taxes which are presented in the balance sheet under non-current
assets.

Asset retirement obligations

The Companys asset retirement obligations relate to the costs associated with the removal of long-lived assets when they will be retired. The
Company records a liability at the estimated current fair value of the costs associated with the removal obligations. The fair value of a liability for asset retirement obligation is recognized if a reasonable estimate of the fair value can be made.
The liability for asset retirement cost is capitalized by increasing the carrying amount of the related long-lived asset and is depreciated over its useful life. The estimated removal liabilities are based on historical cost information, industry
factors and engineering estimates. The Company measures changes in liability for an asset retirement obligation due to the passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period.
The interest rate used to measure that change is the credit-adjusted risk-free rate that existed when the liability was initially measured. That accretion is recognized as an increase in the carrying amount of the liability and as an expense
classified as interest expense in the statement of operations.



49



---

##### Table of Contents

Segment Analysis

The Company has three reportable segments:



| |  |  | Wholesale Voiceglobal voice services;
| | - |  | --------------------------------------



| |  |  | Enterprise and Carrier Datacorporate data transmission services;
| | - |  | -----------------------------------------------------------------



| |  |  | OthersIndia voice, retail internet, data center, signaling, roaming and T.V. uplinking services.
| | - |  | -------------------------------------------------------------------------------------------------

Revenues from the Wholesale Voice and Enterprise and Carrier Data segments exceed 75% of the Companys total consolidated revenues. The Chief
Operating Decision Makers (CODM) comprised of the board of directors and managing director of the Company, determine the Companys reportable segments, and allocate resources and costs to, and assess the performance of, each of the
Companys segments.

Fiscal Year 2010 Compared to Fiscal Year 2009

The following is a summary of segment information for the fiscal years ended March 31, 2009 and March 31, 2010:



|                            |               |        |               |        |               |                      |                |       |                      |        |                |     |               |          |               |         |   |   |       |   |        |  
|--------------------------- | ------------- | ------ | ------------- | ------ | ------------- | -------------------- | -------------- | ----- | -------------------- | ------ | -------------- | --- | ------------- | -------- | ------------- | ------- | - | - | ----- | - | ------ | -
|Segment                     |               | 2009   |               | 2010   |               | Increase /(Decrease) |                |       | Increase /(Decrease) |       
|                            | Revenues      |        | Results       |        | Revenues      |                      | Results        |       | Revenues             |        | Results        |     |               | Revenues |               | Results |  
|                            | Rs.(millions) |        | Rs.(millions) |        | Rs.(millions) |                      | US $(millions) |       | Rs.(millions)        |        | US $(millions) |     | Rs.(millions) |          | Rs.(millions) |         |   | % |       | % |       
|Wholesale Voice             |               | 50,207 |               | 8,771  |               | 56,855               |                | 1,265 |                      | 5,448  |                | 121 |               | 6,648    |               | (3,323  | ) |   | 13.24 |   | (37.89 | )
|Enterprise and Carrier Data |               | 25,184 |               | 22,500 |               | 25,325               |                | 563   |                      | 22,480 |                | 500 |               | 141      |               | (20     | ) |   | 0.56  |   | (0.09  | )
|Others                      |               | 21,904 |               | 13,960 |               | 23,900               |                | 532   |                      | 15,906 |                | 354 |               | 1,996    |               | 1,946   |   |   | 9.11  |   | 13.94  |  
|Total                       |               | 97,295 |               | 45,231 |               | 106,080              |                | 2,360 |                      | 43,834 |                | 975 |               | 8,785    |               | (1,397  | ) |   | 9.03  |   | (3.09  | )

Wholesale Voice

In
fiscal 2010 and 2009, the Company carried approximately 32.6 billion minutes and 25 billion minutes, respectively, of international voice traffic. The Indian business of the Company carried international traffic of approximately 9.76 billion minutes
in fiscal 2010 and 8.37 billion minutes in fiscal 2009. The segment results of Wholesale Voice decreased from Rs. 8,771 million in fiscal 2009 to Rs. 5, 448 million in fiscal 2010, a decrease of 37.89% due to a decrease in margins.
However there is continuous focus on increasing volumes as result of which segment revenues have increased

Segment results of Wholesale Voice
were approximately 9.58% and 17.47% of total wholesale voice revenues for fiscal 2010 and fiscal 2009, respectively.

The retentions per
minute are in line with the pricing prevailing in the highly competitive global voice markets in which the Company operates. Though on a blended basis the Company has been able to maintain its retentions, these are expected to decrease in the
foreseeable future.

Enterprise and Carrier Data

Revenues from our Enterprise and Carrier Data segment have increased by 0.56% in fiscal 2010, from Rs. 25,184 million in fiscal 2009 to Rs.
25,325 million in fiscal 2010. Though the Company has witnessed volume growth, tariff drops have been significant and the Company expects tariffs to continue to be under pressure.

The segment result of Enterprise and Carrier Data decreased from Rs. 22,500 million in fiscal 2009 to Rs. 22,480 million in fiscal 2010, a
decrease of 0.09%. The Enterprise and Carrier Data segment results were 89.34% and 88.77% of Enterprise and Carrier Data segment revenue for fiscal 2009 and fiscal 2010, respectively. However, these segment results are not indicative of the true
margins of this segment as substantial costs of the Company cannot be allocated among segments, as discussed below and in the consolidated financial statements of the Company.

Others

Revenues from
the Others segment increased from Rs. 21,904 million in fiscal 2009 to Rs. 23,900 million in fiscal 2010, an increase of 9.11%. The segment results increased from Rs. 13,960 million in fiscal 2009 to Rs. 15,906 million in fiscal
2010. Other value-added services including mobile roaming and signaling, data centers, TV uplinking, VPN and O&M revenue, have all contributed to significant growth in segment revenues. Volumes in national long distance services have decreased
by approximately 5% and retentions for this business decreased marginally from Rs. 0.26 in 2009 to Rs. 0.25 in 2010.



50



---

##### Table of Contents

Fiscal Year 2009 Compared to Fiscal Year 2008

The following is a summary of segment information for the fiscal years ended March 31, 2008 and March 31, 2009:



|                            |               |        |               |        |               |                      |                |                      |               |        |                |     |               |        |               |        |   |       |  |      
|--------------------------- | ------------- | ------ | ------------- | ------ | ------------- | -------------------- | -------------- | -------------------- | ------------- | ------ | -------------- | --- | ------------- | ------ | ------------- | ------ | - | ----- |  | -----
|Segment                     |               | 2008   |               | 2009   |               | Increase /(Decrease) |                | Increase /(Decrease)
|                            | Revenues      |        | Results       |        | Revenues      |                      | Results        |                      | Revenues      |        | Results        |     | Revenues      |        | Results      
|                            | Rs.(millions) |        | Rs.(millions) |        | Rs.(millions) |                      | US $(millions) |                      | Rs.(millions) |        | US $(millions) |     | Rs.(millions) |        | Rs.(millions) |        | %
|Wholesale Voice             |               | 46,687 |               | 7,539  |               | 50,207               |                | 987                  |               | 8,771  |                | 173 |               | 3,520  |               | 1,232  |   | 7.54  |  | 16.34
|Enterprise and Carrier Data |               | 18,809 |               | 15,977 |               | 25,184               |                | 495                  |               | 22,500 |                | 442 |               | 6,375  |               | 6,523  |   | 33.89 |  | 40.83
|Others                      |               | 16,835 |               | 11,359 |               | 21,904               |                | 431                  |               | 13,960 |                | 275 |               | 5,069  |               | 2,601  |   | 30.11 |  | 22.90
|Total                       |               | 82,331 |               | 34,875 |               | 97,295               |                | 1,913                |               | 45,231 |                | 890 |               | 14,964 |               | 10,356 |   | 18.18 |  | 29.69

Wholesale
Voice

In fiscal 2009 and 2008, the Company carried approximately 25 billion minutes and 23 billion minutes, respectively, of international
voice traffic. The Indian business of the Company carried international traffic of approximately 8.49 billion minutes in fiscal 2009 and 6.9 billion minutes in fiscal 2008. The segment results of Wholesale Voice increased from Rs. 7,539 million
in fiscal 2008 to Rs. 8,771 million in fiscal 2009, a rise of 16.34% due to continuous focus on increasing volumes and thus revenues, while cutting costs to improve margins.

Segment results of Wholesale Voice are approximately 17.47% and 16.15% of total wholesale voice revenues for fiscal 2009 and fiscal 2008, respectively.

The retentions per minute are in line with the pricing prevailing in the highly competitive global voice markets in which the Company
operates. Though on a blended basis the Company has been able to maintain its retentions, these are expected to decrease in the foreseeable future.

Enterprise and Carrier Data

Revenues from our Enterprise and Carrier Data segment have increased by 33.89% in fiscal 2009, from Rs. 18,809 million in fiscal 2008 to Rs.
25,184 million in fiscal 2009. Though the Company has witnessed substantial volume growth, tariff drops have been significant and the Company expects tariffs to continue to be under pressure.

The segment result of Enterprise and Carrier Data increased from Rs. 15,977 million in fiscal 2008 to Rs. 22,500 million in fiscal 2009, an
increase of 40.83%. The Enterprise and Carrier Data segment results were 84.95% and 89.34% of Enterprise and Carrier Data segment revenue for fiscal 2008 and fiscal 2009, respectively. However, these segment results are not indicative of the true
margins of this segment as substantial costs of the Company cannot be allocated among segments, as discussed below and in the consolidated financial statements of the Company.

Others

Revenues from
the Others segment increased from Rs. 16,835 million in fiscal 2008 to Rs. 21,904 million in fiscal 2009, an increase of 30.11%. The segment results increased from Rs. 11,359 million in fiscal 2008 to Rs.13,960 million in fiscal 2009.
This has been largely driven by the growth in Internet and other value-added services. Volumes in the national long distance services have increased by approximately 43% though the retentions for this business increased marginally from Rs. 0.24 in
2008 to Rs. 0.26 in 2009. Other value-added services including mobile roaming and signaling, data centers and TV uplinking, have all contributed to significant growth in the segment revenues.

Allocation of Costs Among Segments

Revenues and interconnect charges are directly attributable to each segment. Space segment utilization charges, rent of landlines and other network and
transmission costs are allocated based on the utilization of satellite and landlines by the businesses included in each segment. License fees for international voice and corporate data transmission services are allocated based on net revenues
generated from these services. Depreciation and amortization, impairment loss on intangible assets and all other operating costs are unallocable.

Telecommunication services are provided utilizing the Companys property plant and equipment which do not generally make a distinction between the
types of service. As a result, assets and expenses relating to those assets are not allocated to segments.



51



---

##### Table of Contents

Liquidity and Capital Resources



|                                                      |  |                |   |  |                |   |  |                |   |  |                 |  
|----------------------------------------------------- |  | -------------- | - |  | -------------- | - |  | -------------- | - |  | --------------- | -
|                                                      |  | 2008           |   |  | 2009           |   |  | 2010           |  
|                                                      |  | (Rs. millions) |   |  | (Rs. millions) |   |  | (Rs. millions) |   |  | (US $ millions) |  
|Cash flows provided by operating activities           |  | 10,401         |   |  | 14,724         |   |  | 14,413         |   |  | 321             |  
|Cash flows used in investing activities               |  | (16,674        | ) |  | (35,116        | ) |  | (21,604        | ) |  | (481            | )
|Cash flows provided by/(used in) financing activities |  | 6,738          |   |  | 22,548         |   |  | 4,186          |   |  | 94              |  
|Effect of foreign exchange on cash flows              |  | (57            | ) |  | 445            |   |  | 344            |   |  | 7               |  
|Cash and cash equivalents, beginning of year          |  | 2,041          |   |  | 2, 449         |   |  | 5, 050         |   |  | 112             |  
|                                                      |  |                |   |  |                |   |  |                |   |  |                 |  
|Cash and cash equivalents, end of year                |  | 2,449          |   |  | 5, 050         |   |  | 2, 389         |   |  | 53              |  
|                                                      |  |                |   |  |                |   |  |                |   |  |                 |  

Cash Flows Provided by Operating Activities

The Company generated Rs. 10,401million, Rs. 14,724 million and Rs. 14,413 million (US$ 321 million) as cash from operating activities for
fiscal 2008, fiscal 2009 and fiscal 2010 respectively. During fiscal 2010, an increase in net operating revenues contributed to substantial increase in cash flows from operations.

During fiscal 2010, the net impact of working capital and other non-current assets and liabilities changes was an outflow of Rs. 397 million as
against an inflow of Rs. 1,474 million in fiscal 2009 and Rs.3,052 million in fiscal 2008. The outflow of net working capital and other non-current assets and liabilities changes increased due to a combination of a net change in accounts
receivable, advance income taxes(net), prepaid expenses and other current assets, other non-current assets, accounts payable, accrued expenses and other current liabilities and other non-current liabilities in fiscal 2010 over fiscal 2009. The
changes in working capital and other non-current assets and liabilities arise primarily from the timing of receipts and payments related to our accounts receivable, other current and non-current assets, accounts payable and other current and
non-current liabilities.

Cash Flows Used in Investing Activities

The Company used cash amounting to Rs. 16,674 million, Rs. 35,116 million and Rs. 21,604 million (US$ 481 million) towards investing
activities during fiscal 2008, fiscal 2009 and fiscal 2010, respectively. The Companys purchase of tangible and intangible assets net of sale proceeds were lower by Rs 4,167 million in fiscal 2010 as against fiscal 2009. In fiscal 2009,
the Company generated Rs. 4,242 million from the sale of a partial investment in Tata Teleservices Ltd, and in fiscal 2010, the Company used net cash of Rs. 2,826 million during the year from mutual fund redemptions, net of purchases.
The Company had also made additional investments and provided loans to the extent of Rs. 1,962 million to support its long-term venture in South Africa. The Company made additional investments in UTL and a new investment in Bit Gravity
Inc. The restricted interest bearing deposit of Rs. 2,550 million placed with a bank in India in fiscal 2009 as margin money for a short period (40 days) for issuing a bank guarantee until the bank sets up credit limit for the Company. The
restricted interest bearing deposit matured during the fiscal 2010. Further in fiscal 2010, a sum of Rs. 9.26 million were interest bearing restricted deposits with banks due to statutory / legal requirements.

Cash Flows Provided by (Used in) Financing Activities

The Company generated capital resources from its financing activities to the extent of Rs. 6,738 million in fiscal 2008, Rs. 22,548 million
in fiscal 2009 and Rs. 4,186 million (US$ 94 million) in fiscal 2010. During fiscal 2009, the Companys proceeds from long-term borrowings net of repayment were Rs. 21,920 million, which the Company used for various capital
expenditures and to augment growth plans. During fiscal 2010, the Companys proceeds from long-term borrowings net of repayment were Rs. 9,389 million, which the Company used for various capital expenditures and to augment growth plans.
The Company repaid Rs. 3,893 million (net of additional borrowings) in fiscal 2010 ranging from overnight overdrafts to short-term loans for a period up to one year. The Company as on March 31, 2010, had total long-term debt of Rs.
43,551 million (US$ 969 million) and cash and cash equivalents of Rs. 2,389 million (US$ 53 million) as against long-term debt of Rs. 48,601 million and cash and cash equivalents of Rs. 5,050 million as of March 31, 2009.

Other than the normal business capital expenditures related to its existing businesses and related working capital requirements, the known
and likely commitments of the Company for new and existing ventures and debt repayments are discussed below. The Company will have to explore options to raise financial resources either in the domestic or global markets or both to meet its likely
commitments. The terms and conditions under which financing will be available cannot be determined and are subject to fluctuations and uncertainties. Any problems in obtaining favorable credit ratings and access to the financial markets can be
detrimental to the Companys liquidity position and can cause delays and cost escalations in the Companys business plans.



52



---

##### Table of Contents

The following factors are expected to impact the Companys liquidity and capital resources:

Board of Directors Approval for Investments in South Africa

The Company owns 43.16% in SEPCO Telecommunication Pty. Ltd. (SEPCO). SEPCO in turn owns 51% in Neotel, the second national telecommunications
operator in South Africa. In addition to the above, the Company directly owns 27% in Neotel. The Board has approved an investment of up to US$ 300 million over a four year period in Neotel.

Planned Capital Expenditures and Cash Requirements

The Company has forecasted total capital expenditures of approximately Rs. 24,363 million (US$ 542 million) in its annual operating plan for fiscal
2011 for upgrading facilities and setting up new networks and facilities. This is over and above the investment commitment in Neotel.

The
capital expenditures include a planned investment in ongoing cable systems for approximately Rs 10,743 million (US$ 239 million) which includes some of the ongoing projects like Eurasia, IMEWE, the West Africa Cable system and the Gulf
cable.

Fall in Revenues due to Tariff Drops both in Voice and Data

The Company has gradually over the past years witnessed pricing pressures on its products and services, both in the voice and other segments. Further, the
entry into the India enterprise business of major international carriers who have capacities on international cables may cause prices of many of our enterprise products and services to decline. These factors could cause revenues and profits to
decline in fiscal 2010 and future periods, which would affect the working capital of the Company.

Unfavorable
Resolution of Tax Disputes

An unfavorable outcome in the future on the tax disputes in respect of its tax holiday claim under
Section 80-IA, claim for capital loss on sale of ICO Global, reimbursement of the DoT levy by Government of India and penalties would negatively affect the Companys results of operations by Rs. 6,275 million, Rs.1, 077 million,
Rs. 5,530 million and Rs.6, 871 million, respectively.

Taxes and interest relating to these tax disputes (other than penalties),
wherever the same have been sustained against the Company, have been paid in full and classified as advance income taxes on the balance sheet. Penalties of Rs. 6,861 million (out of a total Rs. 6,871 million of penalties imposed by
the tax authorities) have also been paid, which may result in an additional future payment of up to Rs. 10 million if the Company is unsuccessful in all of its significant tax disputes.

Details of Loan Facilities and Financing Requirements

In fiscal 2010 and fiscal 2009, the Companys outstanding loan balance increased by approximately Rs. 1,367 million and
Rs. 29,809 million respectively, consisting of an increase in short-term borrowings of Rs. 6,417 million and Rs. 1,592 million in fiscal 2010 and 2009 respectively and a decrease in long-term borrowings of Rs. 5,050 million
and an increase in long-term borrowings of Rs. 28,217 million in fiscal 2010 and fiscal 2009 respectively. The additional short-term borrowings were incurred to finance the Companys working capital requirements. The unsecured short-term
borrowings carried a weighted average interest rate of approximately 7.38% per annum and 9.67% per annum in fiscal 2010 and fiscal 2009 respectively. The long-term borrowings consist of secured and unsecured term and foreign currency loans
(mainly denominated in US dollars and INR) with interest rates ranging from Libor plus 300 basis points to 470 basis points per annum for US dollars denominated loans and 5.95% to 11.70% per annum on secured and unsecured Indian Rupee loans.
The maturity dates of these loans range from April 2010 to July 2019. As of March 31, 2010, the Companys total interest bearing debt was 130% of total shareholders equity as compared to 115% on March 31, 2009.

The Company has unutilized lines of short-term credit facilities of Rs. 9,559 million and Rs. 7,345 million as of March 31, 2010 and as of
March 31, 2009, respectively and Rs. Nil and Rs 4,500 million of long-term credit facilities as of March 31, 2010 and as of March 31, 2009, respectively.

In fiscal 2011, the Company may require additional financing of approximately Rs. 16,137 million for capital expenditures. In addition, the Company
may need to raise short-term funds to meet temporary working capital requirements from time to time. Further, the Company intends to refinance/repay Rs. 6,087 million short-term loans and Rs. 11,958 million long-term loans maturing in
fiscal 2011. The additional financing may be obtained by way of loans from Indian and overseas banks / financial institutions. These loans will be denominated mainly in Indian Rupee, US dollar and South African Rand.

The Company may also obtain financing through one or more equity offerings which would be subject to shareholders approvals (including the
Government of India).



53



---

##### Table of Contents

Details of Loan covenant restrictions:

The financial loans covenants are applicable to long-term dollar denominated loans and will also be applicable to ZAR denominated long-term loan from
fiscal 2010 onwards pursuant to the conversion of a ZAR denominated bridge loan of ZAR 315 million into a long-term loan. The financial covenants are based on the annual consolidated financial statements of the Company prepared in accordance
with Indian Accounting Standards (referred to as Indian GAAP). In accordance with the loan agreements, the annual consolidated financial statements to compute the covenants exclude the financial statements of VSNL SNOSPV Pte. Ltd, a
subsidiary, SepCo Communications (Pty) Limited, and United Telecom Limited, joint ventures and Neotel (Pty) Limited, a subsidiary of SepCo Communications (Pty) Limited (referred to as Relevant Group)

Breach of any financial covenant will result in an event of default under the applicable loan agreement and will give the lenders the right to demand
immediate loan repayments. The financial covenants that are applicable for fiscal 2009 and fiscal 2010 are set out below in table. The terms defined in the loan agreements that are used in the financial covenants are detailed after the table.



|    |  |                                                                          |  |                                                                         |  |                                                                   |  |                                                                                                                                                                                                                                                                      |  |                                                                                  |  |                                                                                   
|--- |  | ------------------------------------------------------------------------ |  | ----------------------------------------------------------------------- |  | ----------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|No. |  | Loan balance as
ofMarch 31, 2009 to whichFinancial Covenant isapplicable |  | Loan balance as ofMarch 31, 2010 towhich FinancialCovenant
isapplicable |  | Financial Covenant                                                |  | Threshold level
pertaining to the
financial covenant                                                                                                                                                                                                                 |  | Actual
levelpertaining tofinancialcovenant for the fiscal 2009                   |  | Actual
levelpertaining tofinancialcovenant for the fiscal
2010                    
|1   |  | Rs. 28,979 million (US$ 570 million)                                     |  | Rs. 33,438 million (US$ 743 million)                                    |  | Tangible Net Worth of the Relevant Group                          |  | As of March 31, 2009 must exceed Rs. 40 billion. 
As of March 31, 2010, 2011 and 2012 must exceed Rs. 25 billion 
As of March 31, 2013 must exceed Rs. 35 billion. 
As of March 31, 2014 and annual periods ending beyond March 31, 2014 must exceed Rs. 42 billion. |  | Tangible net worth was Rs. 52.18 billion.                                        |  | Tangible net worth was Rs. 51.07 billion                                          
|    |  |                                                                          |  |                                                                         |  |                                                                  
|2   |  | Rs. 28,979 million (US$ 570 million)                                     |  | Rs. 33,438 million (US$ 743 million)                                    |  | Ratio of Total Net Fixed Assets of the Relevant Group to Net Debt |  | Should exceed 1.6 times                                                                                                                                                                                                                                              |  | The ratio of Total Net Fixed Assets to Net Debt was 3.90 times.                  |  | The ratio of Total Net Fixed Assets to Net Debt was 3.18 times.                   
|    |  |                                                                          |  |                                                                         |  |                                                                  
|3   |  | Rs. 28,979 million (US$ 570 million)                                     |  | Rs. 33,438 million (US$ 743 million)                                    |  | Ratio of Net Debt to EBITDA and limit on Net Debt                 |  | For any relevant fiscal year in which the ratio of Net Debt to EBITDA is greater than 3.25:1, Net Debt should not exceed US$ 2.3 billion                                                                                                                             |  | Net Debt to EBITDA ratio was 2.51 times and the Net Debt was US$ 865.71 million. |  | Net Debt to EBITDA ratio was 3.63 times and the Net Debt was US$ 1,194.75 million.
|    |  |                                                                          |  |                                                                         |  |                                                                  
|4   |  | Rs. 28,979 million (US$ 570 million)                                     |  | Rs. 33,438 million (US$ 743 million)                                    |  | The ratio of EBITDA to Net Interest Expense                       |  | EBITDA in fiscals 2009 to 2014 should exceed Net Interest Expense as follows:
 2009 - 3.00 times
 2010 and 2011 - 2.25 times
 2012 - 2.75 times
 2013 - 3.10 times
 2014 - 3.25 times                                                                                |  | The ratio of EBITDA to Net Interest Expense was 7.65 times.                      |  | The ratio of EBITDA to Net Interest Expense was 3.72 times.                       



54



---

##### Table of Contents

|  |  |                                      |  |                                      |  |                              |  |                                                                           |  |                                                                                              |  |                                                                                             
|- |  | ------------------------------------ |  | ------------------------------------ |  | ---------------------------- |  | ------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|  |  |                                      |  |                                      |  |                             
|5 |  | Rs. 28,979 million (US$ 570 million) |  | Rs. 33,438 million (US$ 743 million) |  | Ratio of Net Debt to EBITDA. |  | In fiscals 2013 and beyond, Net Debt should not exceed 3.25 times EBITDA. |  | This covenant is applicable from fiscal 2013 onwards and hence not relevant for fiscal 2009. |  | This covenant is applicable from fiscal 2013 onwards and hence not relevant for fiscal 2010.

In fiscal 2009, the Company renegotiated the financial covenants on all long-term dollar denominated loans totaling Rs. 28,979 million. The Company was
in compliance with all of the new and revised covenants as of March 31, 2009 and March 31, 2010. The covenants were renegotiated in fiscal 2009 in order to facilitate the Companys ability to obtain additional long-term financing. The
need for additional long-term financing is a result of a change in the Companys business plan to increase capital expenditures.

Definitions:

Tangible Net Worth means, as at any particular time, shareholders funds less (but without double counting) any amount
included in shareholders funds which is attributable to:



| | a. | goodwill;
| | -- | ---------



| | b. | amounts set aside for tax;
| | -- | --------------------------



| | c. | minority interests;
| | -- | -------------------



| | d. | the amount by which the net book value of any asset has been written up after 31 March 2006 (or, in the case of a person becoming a member of the Relevant Group
after that date, the date on which that person became or becomes a member of the Relevant Group) by way of revaluation or on its transfer from one member of the Relevant Group to another; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e. | any dividend or other distribution declared, recommended or made by any member of the Group,
| | -- | --------------------------------------------------------------------------------------------

but ignoring any variation in the credit or debit balance on the Relevant Group consolidated profit and loss account since the date of the then latest
audited consolidated balance sheet of the Relevant Group except to the extent reflected in any later Relevant Group consolidated profit and loss statement.

For the avoidance of doubt the Wimax licence fee will not be deducted when calculating Tangible Net Worth and any depreciation or amortization of the
Wimax licence fee included in the calculation of Tangible Net Worth shall be cumulatively added back.

Total Net Fixed
Assets means at any time but without double counting:



| | a. | the aggregate book value of all fixed assets less depreciation;
| | -- | ---------------------------------------------------------------



| | b. | the aggregate book value of all capital work in progress;
| | -- | ---------------------------------------------------------



| | c. | investments (but excluding the book value of the Tata Teleservices Limited (TTSL) Investment); and
| | -- | --------------------------------------------------------------------------------------------------



| | d. | the last traded value of the TTSL Investment,
| | -- | ---------------------------------------------

in each case, of each member of the Relevant Group as determined from the financial statements of the Relevant Group.

Net Debt means at any time, without double counting, the aggregate net amount of all borrowings of the Relevant Group:



| | a. | excluding any working capital or similar facilities (the proceeds of which are applied solely towards working capital purposes) which are (i) not made available in
cash by way of short term or long term loans; and (ii) not exceeding an aggregate amount of US$75,000,000 (or its equivalent in any other currency or currencies); and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | reducing by any cash and/or cash equivalents and investments made in mutual funds, bank deposits and any other available means for surplus funds investment by the
Relevant Group.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



55



---

##### Table of Contents

EBITDA means, in relation to any relevant fiscal year, the total consolidated profit of
the Relevant Group for that relevant fiscal year:



| | a. | before taking into account:
| | -- | ---------------------------



| | i. | Interest Expense;
| | -- | -----------------



| | ii. | tax;
| | --- | ----



| | iii. | any share of the profit of any associated company or undertaking, except for dividends received in cash by any member of the Relevant Group; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | extraordinary and exceptional items (excluding tax and licence fee refunds); and
| | --- | --------------------------------------------------------------------------------



| | b. | after adding back all amounts provided for depreciation and amortisation for that Relevant Period, as determined from the financial statements of the Relevant Group.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Interest Expense means Interest Expense less all income received by the Relevant Group in the relevant
fiscal year in respect of any cash and/or cash equivalents and investments made in mutual funds, bank deposits and any other available means of surplus funds investment of the Relevant Group.

Interest Expense means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges (whether or
not paid, payable or capitalised) accrued by the Relevant Group in the relevant fiscal year in respect of borrowings including:



|a. | the interest element of leasing and hire purchase payments;
|-- | -----------------------------------------------------------



|b. | commitment fees, commissions, arrangement fees and guarantee fees; and
|-- | ----------------------------------------------------------------------



|c. | amounts in the nature of interest payable in respect of any shares other than equity share capital, adjusted (but without double counting) by adding back the net amount
payable (or deducting the net amount receivable) by members of the Relevant Group in respect of that Relevant Period under any interest or (so far as they relate to interest) currency hedging arrangements and all as determined from the financial
statements.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on the covenants levels as on March 31, 2010, the Company could have raised additional debt of Rs.35,243
million without breaching any of its debt covenants as on March 31, 2010. Accordingly, considering the Companys current financial position, and taking into account managements assessment of its business potential, the Company
anticipates that it will continue to comply with the covenants described above.

Other material limitationsDebt and non-debt
financing :

Panatone Finvest Limited and the Government of India have agreed in the Shareholders Agreement that the Company shall
not undertake certain corporate actions unless at least one director nominated by each of them (in the case of a Board meeting) or at least one authorized representative nominated by each of them (in the case of a shareholder meeting) consents to
such action. These actions include, among other things, the granting of any security or incurring of indebtedness in excess of the net worth of the Company per se. In the event that Panatone Finvest Limited and the Government of India fail to agree
on such matter, their disagreement could result in the Companys inability to borrow funds for future expansion.

However the Board of
Directors of the Company including the nominee directors of the Government of India and Panatone Finvest Limited had accorded an approval for the Company to raise debt, and provide guarantees which may in the aggregate exceed the net worth of the
Company per se by up to Rs. 41,990 million, subject to the Company obtaining shareholders approval in the event the borrowings of the Company on a unconsolidated basis exceed the unconsolidated net worth of the Company as per Indian GAAP. The
unconsolidated net worth of the Company as per Indian GAAP as on March 31, 2010 stood at Rs. 72,807.8 million and the unconsolidated borrowings of the Company as on March 31, 2010 stood at Rs. 26,389 million. In view of the above approval
and the fact that the unconsolidated borrowings are well within the unconsolidated net worth of the Company, management believes that the Company has no material restrictions to raise additional debt necessary to fund its expansion plans.

The authorized share capital of the Company is Rs. 3,000 million of which the issued share capital is Rs. 2,850 million at a par
value of Rs. 10 per share. The Company postponed seeking shareholders approval for an increase of the current level of authorized capital as required Government approvals were not received at the time of the Annual General Body Meeting
held on August 7, 2009. The Company shall approach the shareholders as soon as it receives Government approval for increasing its authorized capital which is under consideration by the Government. However, considering the current market
capitalization and the traded price of the Companys shares on stock exchanges as discussed under Item 9 of Form 20-F, the balance un-issued portion of Rs. 150 million of the authorized capital would enable the Company to raise
additional equity capital at a premium.



56



---

##### Table of Contents

Off-Balance Sheet Arrangements

The Company provided a guarantee for Rs. 5,485 million to the buying stake holder of our investment in TTSL shares in fiscal 2009 in respect of
certain representation and warranties mainly relating to the validity of the selling shareholders title to and sale of TTSL shares and the validity of TTSLs telecommunication license. The Company has agreed with a shareholder of Neotel
that in the event that shareholder cannot fulfill its investment commitment under certain circumstances, the Company will be obligated to invest an additional amount of Rs. 821 million.

Table of Aggregate Contractual Obligations

The Company had the following contractual and commercial commitments related to normal business activities as of March 31, 2010:



|                                            |       |                                      |                 |        |           |       |           |       |                  |      
|------------------------------------------- | ----- | ------------------------------------ | --------------- | ------ | --------- | ----- | --------- | ----- | ---------------- | -----
|                                            |       | Payments Due by Period(Rs.
millions)
|                                            | Total |                                      | Less Than1 Year |        | 1-3 Years |       | 3-5 Years |       | More than5 years
|Purchase Obligations                        |       | 19,464                               |                 | 14,518 |           | 4,943 |           | 3     |                  |     
|Other Long Term Contractual Commitments (1) |       | 9,052                                |                 | 7,693  |           | 1,345 |           | 13    |                  |     
|Operating Lease Obligations                 |       | 16,450                               |                 | 2,988  |           | 4,335 |           | 3,717 |                  | 5,410



|(1) | The other long term contractual commitments consist primarily of bank guarantees amounting to Rs. 1,221 million and standby letters of credit amounting to Rs.
5,629 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company is not involved in any trading activities.

Capital Expenditures

The Company has
forecast total capital expenditures of approximately Rs. 24,363 million (US$ 542 million) in its annual operating plan for fiscal 2011 for upgrading facilities and setting up new networks and facilities. This is over and above the
Companys investment commitment in Neotel. The bulk of the capital expenditures will be made to enhance the transmission capacities and last-mile connectivity of the Company, both inland and offshore, the primary benefit of which will be an
expansion in our capacity, but the enhancements will also improve network resilience, expand network reach, optimize our network and enable us to offer newer services and solutions. The data and internet product businesses of the Enterprise and
Carrier Data segment and Other Segment of the Company will derive the most benefits from these advancements. In addition, the Company expects to make capital expenditures to grow its Wholesale Voice business, including expenditures to develop and
acquire information technology assets, sustenance capital expenditures and expenditures to enhance infrastructure. The Company also expects to make capital expenditures to develop infrastructure that will be able to be used in all the segments of
the Company.

Research and Development, Patents and Licenses

The Company conducts its own internal research and development in order to achieve its strategic goals and to remain a leader in current technological
advancements. The main focus of the Companys internal research and development activity is the exploration of suitable technologies that will enable the Company to best serve its customers, gain a competitive advantage in the
telecommunications market and reduce its cost of operations. The research and development that the Company has focused on in recent years has been on access technologies, content delivery systems, tools for network optimization, graphic user
interface applications for network inventory systems and internet applications.

In accordance with the Companys accounting policy on
research and development, all costs incurred in connection with research and development by the Company are charged to the income statement under the relevant line items.

Financial and Management Accounting and Reporting Systems

The Company was subject to various laws and Government policies in respect of public sector enterprises and followed procedures appropriate for a public
sector entity until its privatization in fiscal 2002. Consequently, the Company did not have the financial and management accounting and reporting systems that are typical of private comparable companies outside India. Although the Company initiated
various steps to improve its processes and systems, the Company has to continue to invest in improving its processes and systems further in light of the dynamic conditions and changes within the industry in which it operates. In addition, the
Company has grown quickly as a result of significant acquisitions in fiscal 2006. In fiscal 2009, the Company has introduced new processes and has also upgraded the ERP system for its international operations due to which the accounting and
reporting systems have significantly stabilized. However, the Company has made and will continue to make significant efforts to further develop and maintain effective accounting and reporting systems.



57



---

##### Table of Contents

|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------

Directors and Principal Officers

The
Company is managed by its board of directors (the Board). The Indian Companies Act, 1956 (the Act) and the Companys Articles of Association (the Articles) provide for a board of directors of not less than
three and not more than twelve directors.

Under the Articles and in accordance with the SHA and SPA, the composition of the Board is
determined as follows:

The Board is to be comprised of 12 directors. At least three-fourths of the total number of directors must, at all
times, be Indian nationals.

So long as the GoI holds at least 10% of the voting equity share capital of the Company, the composition of the
Board must be as follows:



| |  |  | Four out of 12 directors must be permanent or non-retiring directors, of which the GoI and Panatone Finvest Limited are entitled to appoint two
directors each.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The remaining eight directors retire by rotation. Of the retiring directors, four directors must be independent directors. Panatone Finvest Limited and
the GoI are entitled to recommend two independent directors each.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The composition of the remaining four directors, i.e. the retiring non-independent directors, must be determined as follows:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | So long as Panatone Finvest Limited, together with its affiliates, holds 25% of the voting equity shares of the Company, the GoI and Panatone Finvest
Limited nominate two such directors each.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As soon as Panatone Finvest Limited acquires and holds more than 25% but less than 30% of the voting equity shares of the Company, Panatone Finvest
Limited will have the right to appoint three such directors and the GoI will have the right to appoint one such director.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As soon as Panatone Finvest Limited acquires and holds more than 30% of the voting equity shares of the Company, Panatone Finvest Limited will have the
right to appoint all four such directors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Notwithstanding anything to the contrary above:



| |  |  | The GoI has the right to appoint two non-retiring directors so long as the GoI holds at least 10% of the voting equity shares of the Company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The GoI is entitled to appoint one non-retiring director so long as the GoI is a shareholder of the Company.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | If a person who is not a party to the SHA acquires Shares or the right to appoint directors from the GoI, Panatone Finvest Limited or another party to
the SHA and requests the right to nominate one or more directors, such person will be entitled to nominate one or more directors depending on the percentage of equity shares of the Company held by such person.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The proportion of representation of the GoI and Pantone Finvest Limited on any committees or sub-committees of the Board must be the same as that of
such party on the Board.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In the event the Board constitutes a share transfer committee for the purpose of effecting the transfer of the Shares, such share transfer committee
must include one nominee each of Panatone Finvest Limited and the GoI.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As long as Panatone Finvest Limited holds 25% of the voting equity shares of the Company, one of the directors nominated by Panatone Finvest Limited
must be the Managing Director of the Company.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2010 the Board had twelve directorsfour
independent directors, two directors nominated by the GoI as non-retiring directors and six directors nominated by Panatone Finvest Limited.

Mr. H.P. Mishra, who was nominated by the Government of India as a permanent (non retiring) director, has ceased to be a director on the Board of
Tata Communications Limited with effect from 1 April 2010 and Mr. Manish Sinha, Dy. Director General (LF), Department of Telecommunications, has been appointed in his place on the Board as a permanent (non-retiring) director. With effect
from 15 September 2010, Mr. Manish Sinha ceased to be a Director on the Board and Mr. Md. Shahbaz Ali, Dy. Director General (LF-II), Department of Telecommunications, has been appointed in his place as a permanent (non-retiring)
director.



58



---

##### Table of Contents

The business address of each of the directors is the registered office of the Company. As of
September 30, 2010, the directors, their positions and terms were as follows:



|                        |  |     |  |                                               |  |                              |  |               
|----------------------- |  | --- |  | --------------------------------------------- |  | ---------------------------- |  | --------------
|Name                    |  | Age |  | Position                                      |  | Term                         |  | Director since
|Subodh Bhargava         |  | 68  |  | Independent Director and Chairman             |  | Liable to retire by rotation |  | May 2002      
|Srinath Narasimhan(1)   |  | 48  |  | Managing Director and Chief Executive Officer |  | Non-retiring Director        |  | February 2002 
|Kishor A. Chaukar       |  | 63  |  | Director                                      |  | Liable to retire by rotation |  | July 2002     
|P.V. Kalyana Sundaram   |  | 52  |  | Independent Director                          |  | Liable to retire by rotation |  | September 2005
|V.R.S. Sampath          |  | 54  |  | Independent Director                          |  | Liable to retire by rotation |  | September 2005
|Amal Ganguli            |  | 71  |  | Independent Director                          |  | Liable to retire by rotation |  | July 2006     
|Vinod
Kumar(2)          |  | 45  |  | Director                                      |  | Non-retiring Director        |  | February 2007 
|S. Ramadorai            |  | 66  |  | Director                                      |  | Liable to retire by rotation |  | June 2007     
|A.K.
Srivastava(3)      |  | 59  |  | Director (GoI Nominee)                        |  | Non-retiring Director        |  | August 2007   
|A.R. Gandhi             |  | 67  |  | Director                                      |  | Liable to retire by rotation |  | September 2007
|Dr. Ashok Jhunjhunwala  |  | 57  |  | Director                                      |  | Liable to retire by rotation |  | October 2008  
|Mr. Md. Shahbaz Ali((3) |  | 43  |  | Director (GoI Nominee)                        |  | Non retiring Director        |  | September 2010



|(1) | Mr. N. Srinath was appointed as Managing Director and Chief Executive Officer of the Company until 2012.
|--- | --------------------------------------------------------------------------------------------------------

|(2) | Mr. Vinod Kumar is also the Chief Operating Officer and Managing Director of the Companys wholly-owned subsidiary Tata Communications
International Pte Ltd.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Typically, nominee directors continue on the Board for so long as the nomination is not changed by the GoI.
|--- | -----------------------------------------------------------------------------------------------------------

There are no exclusive directors service contracts providing for benefits upon termination of employment with the Company or any of its
subsidiaries except those normal retirement benefits applicable to the employees of the Company. However, as per the agreement between the Company and Mr. N. Srinath, his employment can be terminated by either party by giving six months notice
or by the Company on paying six months basic salary in lieu thereof.

Set forth below is selected biographical information for the
Companys directors:

MR. SUBODH BHARGAVA

CHAIRMAN

Mr. Subodh Bhargava has
been Chairman of the Board since April 2005 and a director of the Company since May 2002. Mr. Bhargava is Chairman Emeritus of the Eicher Group, a position he has held since retiring as Group Chairman and Chief Executive of the Eicher Group in
March 2000. Mr. Bhargava is also Chairman of Wartsila India Ltd. He currently serves on the Board of the Centre for Policy Research, is a Member of the Technology Development Board of Indias Ministry of Science & Technology
serves as a director of Tata Steel Limited, Tata Motors Limited, Power Finance Corporation Limited and Larsen & Toubro. He is past President of the Confederation of Indian Industry (CII) and the Association of Indian Automobile
Manufacturers and past Vice President of the Tractor Manufacturers Association.

MR. SRINATH NARASIMHAN

MANAGING DIRECTOR AND CEO

Mr. Narasimhan Srinath has been the Managing Director and CEO of the Company since February 2007 and a director of the Company since February 2002.
Mr. Srinath was Director of Operations at Tata Communications Limited from February 2002 until February 2007. Prior to that, he was Chief Executive Officer of Tata Internet Services from late 2000 until February 2002 and Chief Operating Officer
of Tata Teleservices from April 1999 until late 2000. Mr. Srinath joined the Tata group in 1986 and has held positions in project management, sales and marketing and corporate functions in various Tata companies.



59



---

##### Table of Contents

MR. KISHOR A. CHAUKAR

DIRECTOR

Mr. Kishor A. Chaukar
has been a director of the Company since July 2002. He is the Managing Director of Tata Industries Limited (TIL). Mr. Chaukar is a member of the group Corporate Centre, which is engaged in strategy formulation at the House of Tata. He serves on
the boards of Tata Teleservices Limited, Tata Autocomp Systems Limited, Tata Investment Corporation Limited, and other group companies. Mr. Chaukar is the chairman of the Tata Council for Community Initiatives (TCCI)the nodal agency of
the Group on all matters related to corporate sustainability. Mr. Chaukar is a member of the Board of Advisory Body of several national and international organizations in the corporate sustainability and human rights space such as the Global
Reporting Initiative  Amsterdam Shell Foundation Breathing Space India Advisory Body- New Delhi and the Tata Memorial Centre  Mumbai. Mr. Chaukar was previously the managing director of ICICI Securities & Finance Company
Ltd from July 1993 to October 1998 and a board member of ICICI Ltd from February 1995 to October 1998.

MR. P.V. KALYANASUNDARAM

DIRECTOR

Mr. P.V.
Kalyanasundaram has been a director of the Company since September 2005. He is an advocate and was formerly a legal advisor to Pallavan Transport Corporation and the Chennai Metropolitan Water Supply and Sewerage Board. He was also a trustee of the
Jawaharlal Nehru Port Trust, Mumbai, and a member of the Censor Board, Chennai. From 2000 to 2004, Mr. Kalyanasundaram was the chairman and trustee of Pachayappas Trust, Chennai, where he managed several educational institutions,
including seven colleges and six schools, and the trusts assets.

DR. V.R.S. SAMPATH

DIRECTOR

Dr. V.R.S Sampath has been
a director of the Company since September 2005. Dr. Sampath is an empanelled advocate to both Canara Bank and Indian Overseas Bank. He is an Independent Director of Arani Agro Oil Industries Limited, Hyderabad, a joint venture project of India
and Malaysia. Dr. Sampath is a member of various government committees like Indian Council of Forestry Research and education, Disciplinary Committee of the Institute of Cost and Work Accountants of India, Tamil Nadu State Library book
selection committee etc. He is the chairman of various non-governmental organizations. Dr. Sampath is a member of the Indian Council of Arbitration and other professional associations and is also advisor for many educational institutions in
India and abroad.

MR. AMAL GANGULI

DIRECTOR

Mr. Amal Ganguli has been
a director of the Company since July 2006. Mr. Ganguli retired from PricewaterhouseCoopers in 2003, as the Chairman and Senior Partner of Pricewaterhouse Coopers (PWC), India. Mr. Ganguli serves as a director and audit committee
chairman/member of a number of listed companies, including Century Textiles and Industries Limited, HCL Technologies Limited, Maruti Suzuki India Limited, New Delhi Television Limited and Tube Investments of India Limited.

MR. VINOD KUMAR

DIRECTOR

Mr. Vinod Kumar has been a director of the Company since February 2007. He is also President and Managing Director of Tata
Communications International Pte. Ltd.,a subsidiary of the Company. He was previously Senior Vice-President of Asia Netcom, where he was responsible for strategy formulation, product marketing and sales. He was actively involved in the financial
restructuring, and the eventual asset sale of Asia Global Crossing to China Netcom, resulting in the formation of Asia Netcom. Prior to that, Mr. Kumar was Chief Executive Officer of WorldCom Japan and, before that, held various senior
positions in Global One in the United States and Asia.

MR. S. RAMADORAI

DIRECTOR

Mr. S. Ramadorai has been
a director of the Company since June 2007. Mr. Ramadorai is the Vice Chairman of Tata Consultancy Services (TCS), a global IT services and was previously the Chief Executive Officer and Managing Director of TCS since 1996 and has been
associated with TCS for 38 years. Mr. Ramadorai is on the Boards of a number of companies and educational institutions  Tata Industries Limited, Hindustan Unilever Limited, Bombay Stock Exchange and the MIT Sloan School of Management. Due
to his commitment and dedication to the IT industry he was awarded the Padma Bhushan in January 2006 and the CBE (Commander of the Order of the British empire) by her majesty Queen Elizabeth II.



60



---

##### Table of Contents

MR. A.K. SRIVASTAVA

DIRECTOR

Mr. A.K. Srivastava has
been a director of the Company since August 2007. Mr. Srivastava has a Bachelor of Science and a Masters Degree in Science and is a Graduate from the Institution of Electronics and Telecommunication Engineers (IETE). Mr. Srivastava
began working for the Government of India in 1973 and is currently the Deputy Director General of Access Service in Indias Department of Telecommunications. He is also a director on the boards of ITI Ltd and HTL Ltd.

MR. A.R. GANDHI

DIRECTOR

Mr. A.R. Gandhi has been a director of the Company since September 2007. Mr. Gandhi is a director on the Board of Tata Sons Ltd,
where he was an Executive Director from August 2003 until August 2008, and is a member of the Group Corporate Centre of the Tata Companies. Mr. Gandhi has been assisting the Tata Group in acquiring diverse assets and companies across the globe,
enabling the Tata Group to acquire critical assets, resources and access to world class research and development facilities. He is a fellow member of the Institute of Chartered Accountants in England and Wales and the Institute of Chartered
Accountants of India, and an associate member of the Chartered Institute of Taxation, London. Prior to joining Tata Sons, he was a senior partner with M/s N. M. Raiji & Co., Chartered Accountants. Mr. Gandhi has served as a member of
SEBIs Takeover Panel Exemption Committee and the Institute of Chartered Accountants of Indias Accounting Standards Board.

DR.
ASHOK JHUNJHUNWALA

DIRECTOR

Dr. Ashok Jhunjhunwala has been a director of the Company since October 2008. Dr. Jhunjhunwala received his B.Tech degree from IIT, Kanpur,
and his MS and Ph.D degrees from the University of Maine. From 1978 to 1981, Dr. Jhunjhunwala was with Washington State University as Assistant Professor and since 1981, he has been teaching at IIT, Madras, where he leads the Telecommunications
and Computer Networks group (TeNeT). Dr. Jhunjhunwala is a Director on the boards of the State Bank of India, Tata Teleservices (Maharashtra) Ltd., Polaris, 3i Infotech, Sasken, Tejas, the Institute for Development and Research in Banking
Technology and Exicom. He is a member of Prime Ministers Scientific Advisory Committee and is also a Fellow of the World Wireless Research Forum, Institute of Electrical and Electronics Engineers and Indian academies including Indian National
Academy of Engineering, Indian Academy of Sciences, Indian National Science Academy and National Academy of Sciences.

MR. MD. SHAHBAZ ALI

DIRECTOR

Mr. Md.
Shahbaz Ali is the Director of the Company since September 2010. Mr. Ali has a Masters degree in Arts. Mr. Ali began working for the Government of India in 1990 and is currently the Dy. Director General (TPF & Accounts) in
Indias Department of Telecommunications.

Principal Officers

The names and designations of our other principal officers are listed in the table below.



|                    |  |     |  |                                                                                     |  |                
|------------------- |  | --- |  | ----------------------------------------------------------------------------------- |  | ---------------
|Name                |  | Age |  | Position                                                                            |  | Date of Joining
|Satish Ranade       |  | 57  |  | Company Secretary and Chief Legal Officer                                           |  | May 1987       
|Madhusudhan MR      |  | 47  |  | Chief OfficerCustomer Services and Operations                                      |  | June 2004      
|Sanjay Baweja       |  | 50  |  | Chief Financial Officer                                                             |  | January 2009   
|Srinivasa Addepalli |  | 35  |  | Senior Vice PresidentCorporate Strategy                                            |  | October 2006   
|John Hayduk         |  | 41  |  | Senior Vice President and Chief Technology OfficerNetwork and Services Engineering |  | September 2005 
|Michel Guyot        |  | 52  |  | PresidentGlobal Voice Business                                                     |  | February 2006  
|John Freeman        |  | 40  |  | General Counsel                                                                     |  | June 2004      
|Aadesh Goyal        |  | 47  |  | HeadHuman Resources                                                                |  | Feb 2010       



61



---

##### Table of Contents

Set forth below is selected biographical information for the Companys principal officers:

Mr. Satish G. Ranade, Company Secretary and Chief Legal Officer, has been with the Company since 1987. Prior to joining the Company,
Mr. Ranade was Deputy Secretary of Maharashtra Elektrosmelt Limited, Mumbai. He is a member of the Institute of Company Secretaries of India.

Mr. MR Madhusudhan, Chief Network Officer, has been with the Company since June 2004. Prior to that, he worked with various companies,
including NDDB, BPL Mobile and Lucent Technologies.

Mr. Sanjay Baweja, Chief Financial Officer, is a Chartered Accountant and has
been with the Company since January 2009. Prior to joining the Company, he was with Emaar MGF Land Limited as Executive PresidentCorporate Affairs and Chief Risk Officer. He has also worked in several roles across Bharti Airtel, Xerox
Modicorp, Digital Equipment and Ballarpur Industries.

Mr. Srinivasa Addepalli, Senior Vice PresidentCorporate Strategy,
transferred to the Company from Tata Industries in October 2006, where he was in the Group Chairmans Office and responsible for coordinating the various telecom activities within the Group. Prior to that, he was with the Tata Strategic
Management Group, where he was closely involved with the formulation of the Tata companies telecom strategy and business plans, including the acquisition of Tata Communications Ltd. and the expansion of Tata Teleservices.

Mr. John Hayduk, Senior Vice President and Chief Technology OfficerNetwork and Services Engineering, has over 15 years of
telecommunications experience. Prior to joining the Company in September 2005, he ran Telcordias IMS/Network business unit.

Mr. Michel Guyot, PresidentGlobal Voice Business, has over 30 years of international telecommunications experience. Prior to joining
the Company in March 1977, he was Vice PresidentInternational Markets (Europe, Middle East, Africa, Asia-Pacific) for Teleglobe and its predecessor Teleglobe Inc. Mr. Guyot is also the Chairman of the Board of Directors for the
Telecommunications Executive Management Institute of Canada.

Mr. John R. Freeman,General Counsel, has over 15 years of
international, cross board telecommunications experience representing large multinational companies in legal and compliance matters. Prior to joining Tata Communications in April 2004, Mr. Freeman served as General Counsel and Assistant General
Counsel to several multinational telecommunications / managed services companies headquartered in Asia, the US and Europe.

Mr. Aadesh
Goyalreceived his Masters in Management Studies from BITS-Pilani. Mr. Goyal joined the Company in 2010 as Global Head of Human Resources. He comes to us from PeopleStrong HR Services where he was the Chairman & CEO. Earlier, he
worked with Aricent/Hughes Software Systems for 16 years where he had joined as part of the start-up team and was also a Director on the Board. He played several roles including Global Head of HR, CEO of its BPO Business, and Head of the Gurgaon
Centre. He started his career with C-DoT in Project Management and HR & Technology promotion.

No director or officer of the Company
has any family relationship with any other officer or director of the Company.

Other than as described above, there are no arrangements or
understandings among any directors or any officers and any other persons regarding their elections to their posts with the Company.

Compensation of Directors and Officers

Non-Executive Directors

Remuneration up to a sum not exceeding 1% per annum of the net profits of the Company (calculated in accordance with the provisions of Sections 198,
349 and 350 of the Indian Companies Act) is distributed amongst the directors of the Company as may be decided by the Board. Our shareholders approval of this remuneration plan expired on April 1, 2010. For fiscal 2010, no remuneration has been
paid by way of commission to the non-executive directors.

During fiscal 2010, the directors, other than the executive directors, received a
sitting fee not exceeding Rs. 20,000 (US$445) for attending each Board and audit committee meeting and Rs. 10,000 (US$222) per meeting for attending the meetings of the committees of the Board other than the audit committee. During fiscal 2010, a
total amount of Rs.1, 660,000 (US$36,930) was paid towards sitting fees.

All directors are also reimbursed for travel and out-of-pocket
expenses in connection with their attendance at Board and committee meetings.



62



---

##### Table of Contents

The details of the commissions and sitting fees paid to our non-executive directors for fiscal 2010 are as
follows:



|                               |  |                         |  |             
|------------------------------ |  | ----------------------- |  | ------------
|                               |  | (Amount in Rs. Million)
|Name of the Director           |  | Commission              |  | Sitting Fees
|Mr. Subodh Bhargava [Chairman] |  | NIL                     |  | 0.33        
|Mr. Kishor A. Chaukar          |  | NIL                     |  | 0.26        
|Mr. P.V. Kalyanasundaram       |  | NIL                     |  | 0.22        
|Dr. V.R.S. Sampath             |  | NIL                     |  | 0.22        
|Mr. Amal Ganguli               |  | NIL                     |  | 0.31        
|Mr. Vinod Kumar*               |  | NIL                     |  | NIL         
|Mr. S. Ramadorai               |  | NIL                     |  | 0.08        
|Mr. A.K. Srivastava**          |  | NIL                     |  | NIL         
|Mr. Arun Gandhi                |  | NIL                     |  | 0.10        
|Mr. H.P. Mishra**              |  | NIL                     |  | NIL         
|Dr. Ashok Jhunjhunwala         |  | NIL                     |  | 0.14        
|Total                          |  | NIL                     |  | 1.66        



|* | Because Mr. Vinod Kumar is the managing director and an employee of an international subsidiary of the Company, no sitting fees/commission are payable to him.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | The Government Directors have informed the Company that they shall not accept any sitting fees and commission as their Directorships are considered to be part of their
official duty.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Executive Directors and Principal Officers

During fiscal 2010, the aggregate amount of compensation paid to all directors and principal officers of the Company mentioned herein was approximately
Rs. 220.88 million (US$ 4.90 million) and individual compensation of executive directors and principal officers located in India was as follows:



|                    |  |                                           |  |      
|------------------- |  | ----------------------------------------- |  | -----
|                    |  | (Amount in Rs. Million)Gross Remuneration
|Name                |  | (Rs.)                                     |  | (US$)
|N. Srinath          |  | 13.03                                     |  | 0.29 
|Satish Ranade       |  | 7.66                                      |  | 0.17 
|Madhusudhan MR      |  | 12.48                                     |  | 0.27 
|Sanjay Baweja       |  | 8.22                                      |  | 0.18 
|Srinivasa Addepalli |  | 7.83                                      |  | 0.17 
|Aadesh
Goyal1       |  | 1.01                                      |  | 0.02 



|1 | Joined the Company on February 15, 2010
|- | ---------------------------------------

For fiscal 2010, the aggregate amount set aside or accrued by the Company to provide pension, retirement or similar benefits for directors and principal
officers was approximately Rs. 6.34 million (US$ 0.14 million). A performance pay scheme is in place that is applicable to all employees, including heads of the various business units and support functions in the Company. This performance pay
is based on both the individuals performance and the Companys overall performance during the fiscal year under consideration. The individuals performance is assessed by his superior and is reviewed by the next level manager, after
which the assessed ratings are normalized on a company-wide scale, as appropriate. The performance of the Company is evaluated against the previous years performance based on several pre-defined parameters. Different weights are given to these
two components based on the responsibility level of the employees in the Company with a greater weight to the Companys performance for senior level employees and greater weight to individual performance at junior levels. The performance
evaluation process for employees of subsidiaries is the same as that for the Companys employees. Once the final normalized ratings are determined for the employees of subsidiaries, these are communicated to their respective parent companies,
which are responsible for making the payment.



63



---

##### Table of Contents

Share Ownership

As of September 30, 2010, none of the members of the Board held any Shares or options for Shares in the Company. The executive officers of the
Company, either individually or as a group, did not beneficially own more than one percent of the Companys issued and outstanding Shares.

Global Management Committee

The Company
established a committee to make strategic decisionsthe Global Management Committee. The Global Management Committee is tasked with formulating strategies and endeavoring to build consensus and increase transparency. It is also authorized to
address issues relating to networks, expansion, entry into newer geographies and human resources.

Audit Committee

The audit committee consists of the following members:

(i) Mr. Amal Ganguli (Chairman)

(ii)
Mr. Subodh Bhargava

(iii) Mr. P.V. Kalyanasundaram

(iv) Mr. H.P. Mishra (Till 31 March 2010)

(v) Mr. Manish Sinha (wef 1 April 2010 until 15 September 2010)

(vi) Mr. Md. Shahbaz Ali (wef 15 September 2010)

Mr. Satish Ranade, Company Secretary and Chief Legal Officer of the Company, is the audit committees Secretary.

The Audit Committee met 8 times during fiscal 2010.

Our audit committees powers and terms of reference were created in light of the requirements of the Companies Act, 1956, Clause 49 of the
Companys listing agreement with the Indian stock exchange, and US laws. The powers, terms of reference and scope of the authority of the audit committee include:

Powers of the Audit Committee:



|(1) | To investigate any activity within its terms of reference.
|--- | ----------------------------------------------------------



|(2) | To seek information from any employee.
|--- | --------------------------------------



|(3) | To obtain external legal or other professional advice.
|--- | ------------------------------------------------------



|(4) | To secure the attendance of outsiders with relevant expertise, if it considers it necessary.
|--- | --------------------------------------------------------------------------------------------

Terms of Reference of the Audit Committee:



|(1) | Oversight of the Companys financial process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and
credible;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Recommending to the Board the appointment, re-appointment and, if required, replacement or removal of the statutory auditor and the fixing of audit fees;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Approving payment to statutory auditors for any other services rendered by the statutory auditors;
|--- | --------------------------------------------------------------------------------------------------



|(4) | Reviewing with management the annual and quarterly financial statements before submission to the Board for approval;
|--- | --------------------------------------------------------------------------------------------------------------------



|(5) | Reviewing with management the performance of statutory and internal auditors and the adequacy of internal control systems;
|--- | --------------------------------------------------------------------------------------------------------------------------



|(6) | Reviewing the adequacy of the internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading
the department, reporting structure coverage and frequency of internal audits;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Discussing with internal auditors any significant findings;
|--- | -----------------------------------------------------------



|(8) | Reviewing the 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;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Discussing with statutory auditors the nature and scope of the audit before the audit commences as well as any areas of concern post-audit;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



64



---

##### Table of Contents

|(10) | Looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and
creditors; and
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(11) | Reviewing the whistleblower mechanism.
|---- | --------------------------------------

Scope of the Audit Committees Authority Regarding Whistleblowing:



|(1) | To establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing
matters.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | To take due actions as required under the Companys Whistleblower Policy from time to time.
|--- | -------------------------------------------------------------------------------------------

Review of Information by the Audit Committee:

The audit committee must review the following:



|(1) | Management discussion and analysis of financial condition and results of operations;
|--- | ------------------------------------------------------------------------------------



|(2) | Statement of significant related party transactions submitted by management;
|--- | ----------------------------------------------------------------------------



|(3) | Management letters / letters of internal control weaknesses issued by the statutory auditors;
|--- | ---------------------------------------------------------------------------------------------



|(4) | Internal audit reports relating to internal control weaknesses; and
|--- | -------------------------------------------------------------------



|(5) | The appointment, removal and terms of remuneration of the chief internal auditor.
|--- | ---------------------------------------------------------------------------------

Remuneration Committee

Our remuneration
committee consists of the following members.:



|(1) | Mr. Kishor Chaukar (Chairman)
|--- | -----------------------------



|(2) | Mr. Subodh Bhargava
|--- | -------------------



|(3) | Mr. A.K. Srivastava
|--- | -------------------

Mr. Satish
Ranade, Company Secretary and Chief Legal Officer, is our remuneration committees convener.

The Remuneration Committee met 1 time
during fiscal 2010.

The terms of reference of the Remuneration Committee are to review the performance of the executive directors, after
considering the Companys performance, and recommend to the Board remuneration, including salary, perquisites and commissions to be paid to the Companys executive directors within the overall ceilings approved by the shareholders.

Employees

Tata
Communications Group had 6,457 employees as on March 31, 2010, 5,825 employees as on March 31, 2009, and 5,147 employees as on March 31, 2008. Of these, 1,182 employees, as of March 31, 2010, 1,050 employees as of March 31,
2009 and 1,008 employees as of March 31, 2008 were located outside India.

The Company has a structured process for recruiting new
employees and training its workforce in both technical and non-technical areas. The compensation and employee benefit practices of the Company aim to be market driven, attractive and innovative, and are also adapted to suit geographic requirements.
The Company continues to maintain harmonious relationships with its employees across the globe. The Company has certain categories of its workforce located in India and Canada who are unionized. Company officials meet with union office bearers
regularly to discuss and resolve issues or concerns of the employees. The Company also conducts annual employee satisfaction surveys and, based on the findings, takes various steps to enhance employee engagement and satisfaction.



|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------

Major Shareholders

As of March 31,
2010, 50.03% of the outstanding equity of the Company was held by following Tata entities: Panatone Finvest Limited (33.24%), Tata Sons Limited (12.94%) and The Tata Power Company Limited (3.85 %); while 26.12% continued to be held by the
Government of India.



65



---

##### Table of Contents

The following table sets forth certain information regarding the beneficial ownership of the Companys
Shares as of March 31, 2010, including the beneficial ownership of shares of each person or group known by the Company to own beneficially 5% or more of the outstanding shares, as reported by such persons.



|                                    |  |                                       |  |           
|----------------------------------- |  | ------------------------------------- |  | ----------
|Name of Beneficial Owner            |  | Number of
SharesBeneficially Owned(1) |  | Percentage
|Panatone Finvest Limited            |  | 94,729,654                            |  | 33.24     
|Government of India (2)             |  | 74,446,885                            |  | 26.12     
|Tata Sons Limited                   |  | 36,871,497                            |  | 12.94     
|Life Insurance Corporation of India |  | 24,895,197                            |  | 8.74      



Notes:



|1. | Number of shares and percentage ownership is based on 285,000,000 Shares outstanding as of March 31, 2010. Beneficial ownership is determined in accordance with
rules of the SEC and includes voting and investment power with respect to such shares. All information with respect to the beneficial ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise indicated
below, the Company believes that persons named in the table have sole voting and sole investment power with respect to all the shares shown as beneficially owned, subject to community property laws, where applicable. All Shares issued in India have
the same voting rights. We have not issued different classes of securities.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The shares owned by the Government of India are registered in the name of the President of India in the register of shareholders of the Company.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------

The Companys ADSs are listed on the New York Stock Exchange. Each ADS represents two Shares. As of March 31, 2010,
approximately 21,317,826 Shares (7.48% of the total Shares outstanding as of such date) were held by the custodian, ICICI Bank Limited, for The Bank of New York Mellon, as depositary for the Companys ADSs. The Company is unable to estimate the
percentage of ADSs or Shares held in the United States or the number of record holders in the United States.

Voting Requirements

Under the SHA, the Government of India (or any other entity nominated by it) is required to, at all shareholders meetings of the
Company, exercise the voting rights attached to the Shares held by it in the manner directed in writing by Panatone Finvest Limited, except with respect to those matters listed specifically in the SHA or such matters that require a special
resolution under the provisions of the Companies Act. Matters not listed specifically in the SHA or that do not otherwise require a special resolution under the provisions of the Companies Act, generally include only:



| | a) | receive, consider and adopt the Balance Sheet of the Company, the audited Profit and Loss Account for the year ended on that date, the Auditors Report thereon and
the Report of the Board of Directors as per Indian GAAP.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | Recommendation of Dividend, if any.
| | -- | -----------------------------------



| | c) | Appointment of retiring directors (if the appointments are in consonance with the SHA).
| | -- | ---------------------------------------------------------------------------------------



| | d) | Appointment of new directors (if the appointments are in consonance with the SHA).
| | -- | ----------------------------------------------------------------------------------



| | e) | Remuneration of Directors
| | -- | -------------------------

Related Party
Transactions

The related parties of the Company are Panatone Finvest Limited and Government of India (principal owners), Tata Sons Limited
(Beneficial Owner), subsidiaries of Tata Sons Limited, equity method investees and the Companys principal officers and directors. The Company routinely enters into transactions with some of its related parties, such as providing and receiving
telecommunication services, incurring network and transmission costs, and paying license fees. Transactions and balances with its own subsidiaries are eliminated on consolidation.

In February 2010, 33 subsidiaries of Tata Communications Limited entered into the Brand Equity and Business Promotion Agreement (BEBP) Agreement with
Tata Sons Limited. In accordance with the terms of the agreement, the companies are required to pay certain amounts to Tata Sons for the right to use the brand name TATA. During fiscal 2010, on a consolidated basis the Company accrued an
amount of Rs. 103 million to Tata Sons for the use of the brand name. Please refer to note 28 in the Companys consolidated financial statements for additional information on related party transactions and balances. These do not include
transactions with and among our consolidated subsidiaries, which are eliminated upon consolidation.



66



---

##### Table of Contents

|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------

We have elected to
provide financial statements of the Company pursuant to Item 18 of this Form 20-F and the following (which appear below in this report on Form 20-F) are incorporated herein by reference:



| |  |  | Report of Independent Registered Public Accounting Firm;
| | - |  | --------------------------------------------------------



| |  |  | Consolidated Balance Sheets as of March 31, 2009 and 2010;
| | - |  | ----------------------------------------------------------



| |  |  | Consolidated Statements of Operations for the years ended March 31, 2008, 2009 and 2010;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Consolidated Statements of Shareholders Equity for the years ended March 31, 2008, 2009, 2010;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Consolidated Statements of Cash Flows for the years ended March 31, 2008, 2009 and 2010; and
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Notes to the Consolidated Financial Statements.
| | - |  | -----------------------------------------------

There have not been any significant changes in the Companys financial condition, other than those stated in the consolidated financial statements
attached to this Form 20-F and as otherwise described in this annual report, since the date of the attached annual consolidated financial statements.

Legal Proceedings

Tax Benefit Claim

The Company claimed tax benefits in fiscal years 1996 to 2009 with respect to a portion of its profits pursuant to a tax holiday provision under
Section 80IA of the Income Tax Act which permits tax exemptions for a period of 10 years on profits generated by undertakings providing basic or cellular telecommunication services on or after April 1, 1995. The ITD has taken the position
for years up to fiscal 2005 (assessment by the ITD is pending for the balance years) that the Company is not entitled to such exemptions on the basis that the earth-stations did not qualify as separate business undertakings and that the Company was
not providing basic or cellular telecommunication services. The Company appealed the assessment of the ITD to CIT(A) but the same was dismissed for fiscal years 1996 to 1999 and 2000 to 2004. The Companys appeal in respect of fiscal year 2005
is still pending before CIT(A). In respect of CIT(A)s dismissal of the Companys appeal for fiscal years 1996 to 1999 and 2000 to 2004, the Company has appealed this decision to ITAT. The appeal was denied by ITAT, only in respect of
fiscal year 1996. The Company then appealed ITATs decision in respect of fiscal year 1996 to the High Court. The Company has obtained legal opinions from tax lawyers and tax accountants (following denials at each step by the CIT (A) and
ITAT) all of whom are considered as leading tax experts in India.



| | 1. | The Company based on facts and information available on the operation of an earth station, expert opinions and judicial precedence concluded that earth stations qualify
as undertakings as these independently engage in an activity to generate profits, and income from earth stations can be identified. Additionally, in denying the Companys claim, one of the ITAT members concurred with the Companys position
that earth stations qualify as undertakings
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The tax officer denied the Companys claim on the basis that the earth stations increased the output and improved services without changing the substance of these
services. The Company does not agree with the tax officers basis of denial, and the Companys belief is supported by legal precedence and professional experts opinions, as substantial investments in earth stations have enabled the Company
to significantly increase its ability to carry traffic with substantially improved quality, which has resulted in a substantial increase in revenues.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | The tax officer denied the Companys claim on the basis that the earth station is one link in a long chain of telecommunication services and therefore is not
eligible for a tax holiday under Section 80-IA. The Companys claim, supported by an expert opinion, is that the earth station is an identifiable link engaged in a revenue generating activity and therefore qualifies for tax holiday claim.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67



---

##### Table of Contents

| | 4. | The tax officer denied the claim on the basis that the Company had been providing telecommunication services since fiscal 1986 and therefore was not eligible for the
tax holiday which was available to undertakings that commenced providing telecommunication services from fiscal 1995. As described in (i), the Company, based on judicial precedent and expert opinions, believes that the earth stations which commenced
operations during fiscal 1995 qualify as undertakings and therefore are eligible for tax holiday claims.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The CIT (A) and
the ITAT agreed with the tax officers assessment and denied the Companys tax holiday claim. The CIT (A) denied the claim on a similar basis as that of the tax officer while ITAT has denied the Companys claim on one more
additional premise that the Company does not provide either basic or cellular telecommunication service and therefore does not qualify for such tax holiday.

In evaluating the Companys position on the tax holiday following the ITAT decision that the Company does not provide basic or cellular
telecommunication services and to assess the more-likely than not threshold of its position being sustained in the High Court, the Company relied on a letter from the Government of India granting an exclusive right to the Company to
provide basic telecommunication service. In addition, based on expert opinions, the Company in its appeal to the Bombay High Court submitted that the ITAT may have gone beyond the disputed matter as the tax officer had accepted that the Company
provides basic telecommunication services.

In the Companys case, the dispute is primarily about whether the earth station is an
undertaking and whether it is carrying on the business eligible for the tax holiday. Since an earth station is different from a relatively easily understandable concept of undertaking represented by a brick and mortar manufacturing facility, and
there being no similar precedent, the Company believes that the ITAT had adopted a conservative approach in denying the benefit as such an issue was being examined by the ITAT for the first time. The ITAT generally concludes on a prudent basis to
deny large claims on such issues on the basis that in practice a Company will appeal to the High Court and therefore, any interpretation of law will be made by the High Court.

Based on the Companys analysis of its tax position in respect of the tax holiday claim supported by the legal opinions, the tax appeal mechanism,
the appeal and resolution process in India, and the basis of the CIT (A)s and ITATs decision and on the basis that the CIT (A) and ITAT typically do not render decisions which may result in interpretation of law, it is more likely
than not that the Companys tax holiday will be sustained upon determination of the Bombay High Court or by the Supreme Court.

If the
disputed claims for fiscal years 1996 to 2005 are decided against the Company, the aggregate negative impact to the Companys profit statements would be approximately Rs.6,275 million (US$ 140 million) including interest measured as of
March 31, 2010, and excluding penalties.

Reimbursement of DoT Levy

During fiscal year 1994, the Company received reimbursements from the Government of India in respect of levies (license fees) paid by the Company. The
Company believes that the reimbursements do not qualify as taxable income. However, the ITD has taken the position that the reimbursements should be treated as income and have assessed the amounts owed by the Company at approximately Rs.3,
303 million (US$73 million) (including interest measured as on March 31, 2009, and excluding penalties). The Company had paid the entire amount under protest. The Company appealed the assessment to CIT(A), but the appeal was dismissed. The
Company then appealed CIT(A)s decision to ITAT, which rules in favor of the Company. After going through the records produced, the Tribunal held that the relevant provisions of the law for reopening of the assessment have not been followed by
the ITD and therefore quashed the reassessment order summarily. However, against the said order of the ITAT, the ITD has filed an appeal before the High Court which is yet to come up for hearing. Under the Indian tax laws, the Tribunal is the
highest fact finding authority in the judicial hierarchy and hence judicial decisions given by the Tribunal based on the facts are generally not interfered with by the High Court, being the next higher judicial authority. The Company therefore
believes that the appeal filed by the ITD before the High Court is unlikely to be decided in favour of the ITD by the highest judicial authority.

Based on such judicial analysis and the favourable opinions of the legal counsels, the Company is of the view that no provision is required to be created
in the books for covering the aforesaid liability.

If the above appeal filed by the ITD is decided in favour of the ITD, the Companys
profit statements would be adversely affected by approximately Rs. 5,530 million (US$ 123 million) including interest but excluding penalties pertaining to a reimbursement of the DoT levy and other small disputed issues.



68



---

##### Table of Contents

ICO Global Communications Inc. (ICO) Loss Write-Off Issue

The Company wrote-off Rs.5, 128 million (US$ 114 million) and Rs.52 million (US$ 1 million), during fiscal years 2000 and 2001
respectively, with regard to its investment in the shares of ICO, which filed for bankruptcy protection in the United States in 2000. The write-off was not recognized by the ITD. As a result, the ITD assessed tax and interest at Rs.2, 000 million
(US$ 44 million) and Rs.21 million (US$ 0.5 Million), respectively, which the Company paid under protest. The Company appealed the assessment to CIT(A), but the appeal was dismissed. The Company then appealed the decision of CIT(A) to ITAT. The
Company has consulted a number of tax experts including leading tax lawyers and tax accountants in India. All these experts opined in support of the Companys position. The Company evaluated its uncertain tax position upon each unfavorable
ruling including consulting tax experts and obtaining legal and other expert opinions. None of the experts changed their opinion to agree with the ruling of the CIT (A). If on appeal has ITAT decides against the Company, the aggregate negative
impact to the Companys profit statements would be approximately Rs.1,077 million (US$ 24 million).

Tax Penalties

The ITD has levied penalties originally against the Company totaling Rs. 8,185 million (US$ 182 million) against the tax holiday
claims, ICO investment write off and other miscellaneous claims made by the Company in fiscals 1988, 2000, 2001, 2002, 2003 and 2004 which were not accepted by the ITD. The Company appealed to CIT(A) which granted relief of Rs. 3,219 million
(US$ 72 million) in respect of penalties levied in fiscals 2000 through 2004. An the appeal involving a penalty of Rs. 10 million (US$ 0.22 million) for fiscal 1988 has yet to come up for a hearing. Thus, CIT (A) confirmed the levy of
penalties on the tax holiday claim, ICO investment write offs and on other miscellaneous claims amounting to Rs. 4,956 million (US$ 110 million), for fiscal 2000 through 2004. The Company has filed an appeal against the penalty sustained
by CIT (A) before ITAT totaling to Rs. 4,956 million (US$ 110 million) whereas, based on the information available to the Company, the ITD has appealed the decision of CIT(A) to ITAT involving a penalty amount of Rs.1,905 million
(US$ 42 million) and both appeals are pending for adjudication. The imposition of penalty is adjudicated independently and is not dependent on the outcome of the claim. A penalty would be sustainable only when it is concluded that company provided
inaccurate facts. If all of the appeals are decided against the Company, the aggregate negative impact to its profit statements would be Rs.6, 871 million (US$ 153 million). The Company has not currently provided for this amount in its books of
accounts in light of its understanding of the law and its advice from legal counsel on the strengths of its position vis-à-vis the ITDs position.

An unfavorable outcome in the future on the tax disputes in respect of its tax holiday claim under Section 80-IA, claim for capital loss on sale of
ICO Global, reimbursement of the DoT levy by Government of India and penalties would negatively affect the Companys results of operations by Rs. 6,275 million, Rs.1, 077 million, Rs. 5,530 million and Rs.6, 871 million
respectively.

Taxes and interest relating to these tax disputes (other than penalties), wherever the same have been sustained against the
Company, have been paid in full and classified as advance income taxes on the balance sheet. Penalties of Rs. 6,861 million (out of a total Rs. 6,871 million of penalties imposed by the tax authorities) have also been paid, which may
result in an additional future payment of up to Rs. 10 million if the Company is unsuccessful in all of its significant tax disputes.

Demonopolisation Compensation

The Company sought an exemption for certain compensation received from the DoT in fiscal 2002 and subsequently in fiscal 2005 and fiscal 2006 from income
taxes, claiming the compensation was capital receipts. The ITD did not recognize the Companys claim. As a result, the ITD assessed tax at Rs.622 million (US$ 14 million), which the company paid under protest. The Company appealed to CIT(A).
CIT(A) dismissed the appeal. The Company appealed to ITAT where it is pending for adjudication. If the appeal is decided against the Company, the aggregate adverse implications on the profit statements of the Company would be Rs. 622 million
(US$ 14 million). The Company has not currently provided for this amount in its books of accounts in light of its understanding of the law and its advice from legal counsel on the strengths of its position vis-à-vis the ITDs position.

The aggregate negative impact stated in each of the above cases is based on tax demands raised by the relevant tax authorities, which are
disputed by the Company. The Company has not made a provision for the tax impact stated in each of the above cases even though the ITD has denied its claims since the Company believes, based on its understanding of the tax laws, past judicial
precedents and available legal advice on each matter, that these tax disputes will be decided in the Companys favor at in the courts of India.



69



---

##### Table of Contents

FLAG Telecom Arbitration

In the matter of the ICC arbitration proceedings brought by Reliance Globalcom Limited, formerly known as FLAG Telecom Group Limited
(hereinafter referred to as Reliance or FLAG for easy reference), against Tata Communications Limited, the Tribunal handed down a Final Award dealing with the issue of damages on August 27, 2008. The Tribunal
directed the Company to pay Reliance a sum of US$19.29 million (plus interest of 4.67% compounded annually from May 17, 2006) as damages, against the US$384.7 million (plus interest) sum claimed by Reliance. The Company paid the above
damages along with interest on September 9, 2008.

Tata Communications International Pte Ltd.Possible
non-compliance with U.S. Foreign Corrupt Practices Act (FCPA)

In April 2010, the Company voluntarily disclosed to the U.S.
Department of Justice and the U.S. Securities and Exchange Commission the results of an internal investigation conducted by outside counsel for the Company relating to the activities of a reseller of one of the Companys subsidiaries, Tata
Communications International Pte Ltd. The internal investigation found evidence that the reseller may have offered and made improper payments to officials of a government purchaser in a Southeast Asian country in connection with the resale of the
Companys products. The investigation also found evidence that the Companys sales consultant in the country was aware of the resellers potentially improper activities. Such activities may have violated the U.S. Foreign Corrupt
Practices Act. The investigation did not reveal any prior involvement or knowledge regarding these activities by senior management of the Company or its subsidiary.

The Company has taken remedial action, including terminating its relationship with the sales consultant and with the reseller. The Company cannot
predict the ultimate consequences of these matters at this time, nor can it reasonably estimate the potential liability, if any, related to these matters. However, based on the facts currently known, the Company does not believe that these matters
will have a material adverse effect on its business, financial condition, results of operations or cash flow.

Miscellaneous

The subsidiaries of the Company in various geographies are routinely parties to suits for collection, commercial disputes, claims from customers and/or
suppliers over reconciliation of payments for voice minutes, circuits, internet bandwidth, and / or access to the public switched telephone network, leased equipment, and claims from estates of bankrupt companies alleging that the Company and / or
its subsidiaries received preferential payments from such companies prior to their bankruptcy filings. While management currently believes that resolving such suits and claims individually or in the aggregate will not have a material adverse impact
on the Companys consolidated financial position, these matters are subject to inherent uncertainties.



70



---

##### Table of Contents

License Disputes

The Company has pending disputes with the DOT. Please refer to the discussions on Revenue share and License fees under Item 4.

In addition to the matters described above, the Company is involved in lawsuits, claims, investigations and proceedings which arise in the normal course
of its business.

Dividends

Although the amount varies, it is customary, though not mandatory, for public companies in India to pay cash dividends. Under Indian law, a corporation
pays dividends upon a recommendation by its board of directors and approval by a majority of the shareholders attending the annual general meeting of shareholders, who have the right to decrease but not increase the amount of the dividend
recommended by the board of directors. In addition, the board of directors is empowered to approve interim dividends. Under the Indian Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or
out of the undistributed profits of previous fiscal years. Owners of American Depository Receipts (ADRs) are entitled to receive dividends payable in respect of the Shares represented by their ADSs. The Shares represented by ADSs rank
pari passu with the existing Shares of the Company in respect of dividends. Cash dividends in respect of the Shares represented by the ADSs will be paid to the Companys depositary for the ADSs, The Bank of New York Mellon (the
Depositary), in Rupees and, except as otherwise described in the Deposit Agreement, will be converted by the Depositary into US Dollars and distributed, net of the Depositarys fees and expenses, to the holders of such ADRs.

With respect to Shares issued by the Company during a particular fiscal year, dividends declared and paid for such fiscal year generally
would be prorated from the date of issuance to the end of such fiscal year. Holders of ADRs would only receive dividends prorated from the date of issuance of the underlying Shares to the end of the fiscal year for which such dividends are declared
and paid.

The directors recommended that no dividend be paid for the financial year ended 31 March 2010.

The following table sets forth the annual dividends paid per Share for each of the fiscal years indicated.



|                                    |  |                               |  |       
|----------------------------------- |  | ----------------------------- |  | ------
|For the Fiscal Year Ended March 31, |  | Actual Dividend paidper
Share
|                                    |  | Rs.                           |  | US$(1)
|2010                                |  | NIL                           |  | NIL   
|2009                                |  | 4.50                          |  | 0.09  
|2008                                |  | 4.50                          |  | 0.11  
|2007                                |  | 4.50                          |  | 0.10  
|2006                                |  | 4.50                          |  | 0.10  



|(1) | The conversion of the dividends paid per Share from Indian Rupees to US Dollars is based on the Noon Buying Rate at each respective dividend payment date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

There can be no assurance that any future dividends will be declared or paid.



|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------

The Companys
shares are currently listed on the Bombay Sock Exchange Limited (BSE) and the National Stock Exchange of India Limited in India (NSE).

The
Companys ADSs, represented by ADRs, are listed on the New York Stock Exchange (NYSE) and each ADS represents two shares. The ADSs were issued by The Bank of New York Mellon (the Depositary), pursuant to a Deposit Agreement. On
September 29, 2010, the last reported sale price for the Companys ADSs was US$ 14.13 (source: NYSE).

The number of outstanding
Shares of the Company as of March 31, 2010 was 285,000,000. As of March 31, 2010, there were 71,976 record holders of the Shares listed and traded on the Indian stock exchanges and approximately 10,658,913 of the Companys ADRs
(equivalent to 21,317,826 Shares). The shares of the Company are compulsorily traded in dematerialised form on the BSE and NSE.



71



---

##### Table of Contents

Price History

The table below sets forth the price history of the Shares and ADSs on the BSE, NSE and NYSE for the periods indicated.



|                                          |  |                               |  |                               |  |                                     |  |        |  |       |  |      
|----------------------------------------- |  | ----------------------------- |  | ----------------------------- |  | ----------------------------------- |  | ------ |  | ----- |  | -----
|                                          |  | BSE Price 
perShare1 (In Rs.) |  | NSE Price 
perShare2 (In Rs.) |  | NYSE Price per 
ADS3(In US Dollars)
|Fiscal                                    |  | High                          |  | Low                           |  | High                                |  | Low    |  | High  |  | Low  
|2010                                      |  | 651.00                        |  | 273.20                        |  | 660.00                              |  | 271.80 |  | 27.46 |  | 12.10
|2009                                      |  | 585.00                        |  | 320.00                        |  | 560.00                              |  | 323.05 |  | 28.69 |  | 13.51
|2008                                      |  | 783.00                        |  | 360.50                        |  | 783.00                              |  | 359.00 |  | 40.36 |  | 16.29
|2007                                      |  | 515.35                        |  | 300.05                        |  | 515.80                              |  | 300.10 |  | 23.67 |  | 13.01
|2006                                      |  | 493.45                        |  | 180.00                        |  | 493.50                              |  | 161.00 |  | 21.57 |  | 8.30 
|                                          |  |                               |  |                               |  |                                    
|Fiscal                                    |  | High                          |  | Low                           |  | High                                |  | Low    |  | High  |  | Low  
|2010                                      |  |                               |  |                               |  |                                     |  |        |  |       |  |      
|First Quarter                             |  | 651.00                        |  | 441.00                        |  | 660.00                              |  | 440.05 |  | 27.46 |  | 17.60
|Second Quarter                            |  | 535.95                        |  | 450.00                        |  | 536.00                              |  | 450.00 |  | 21.78 |  | 18.02
|Third Quarter                             |  | 498.50                        |  | 335.00                        |  | 497.95                              |  | 334.10 |  | 21.35 |  | 14.13
|Fourth Quarter                            |  | 377.80                        |  | 273.20                        |  | 377.70                              |  | 271.80 |  | 16.26 |  | 12.10
|                                          |  |                               |  |                               |  |                                    
|2009                                      |  |                               |  |                               |  |                                     |  |        |  |       |  |      
|First Quarter                             |  | 585.00                        |  | 338.00                        |  | 556.00                              |  | 339.90 |  | 28.69 |  | 16.47
|Second Quarter                            |  | 484.00                        |  | 332.00                        |  | 483.90                              |  | 340.10 |  | 24.60 |  | 15.86
|Third Quarter                             |  | 550.00                        |  | 320.00                        |  | 560.00                              |  | 323.05 |  | 24.00 |  | 13.51
|Fourth Quarter                            |  | 549.95                        |  | 382.00                        |  | 545.00                              |  | 380.15 |  | 22.50 |  | 14.34
|                                          |  |                               |  |                               |  |                                    
|Month                                     |  | High                          |  | Low                           |  | High                                |  | Low    |  | High  |  | Low  
|September 2010 (Until September 29, 2010) |  | 354.30                        |  | 310.10                        |  | 354.40                              |  | 318.10 |  | 15.15 |  | 13.62
|August 2010                               |  | 347.60                        |  | 271.00                        |  | 348.00                              |  | 271.55 |  | 14.77 |  | 11.64
|July 2010                                 |  | 294.80                        |  | 256.00                        |  | 294.30                              |  | 248.65 |  | 12.46 |  | 10.93
|June 2010                                 |  | 265.05                        |  | 230.25                        |  | 265.75                              |  | 225.00 |  | 11.32 |  | 9.76 
|May 2010                                  |  | 274.80                        |  | 233.55                        |  | 274.90                              |  | 231.10 |  | 12.29 |  | 9.02 
|April 2010                                |  | 293.90                        |  | 268.40                        |  | 293.50                              |  | 268.10 |  | 13.81 |  | 12.00



|1) | Source: Bombay Stock Exchange Limited (BSE)
|-- | -------------------------------------------

|2) | Source: National Stock Exchange of India Limited (NSE)
|-- | ------------------------------------------------------

|3) | Source: New York Stock Exchange (NYSE)
|-- | --------------------------------------



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------

Share Capital

Not Applicable.

Memorandum
and Articles of Association

The Company is registered under the Indian Companies Act with the Registrar of Companies, Mumbai, India. The
Companys Corporate Identity Number is (CIN) L64200MH1986PLC039266.

The following is a description of the Companys Memorandum and
Articles of Association. It does not purport to be complete and is qualified in its entirety by the Companys Memorandum and Articles of Association that were filed on September 29, 2004 with the SEC as exhibits to the Companys
annual report for fiscal 2004. If the Memorandum and Articles of Association of the Company is silent on any matter, the rules relating to the matter set forth in the Indian Companies Act will govern that particular matter.



72



---

##### Table of Contents

Purpose

The purpose of the Company is:



| |  |  | Managing, controlling and maintaining the operations of the Overseas Communications Service of the DoT, Ministry of Communications, and GoI, with all
its assets and liabilities, including contractual rights and obligations, on such terms and conditions as may be prescribed by the GoI from time to time.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Planning, establishing, developing, providing, operating and maintaining all types of international telecommunication networks, systems and services,
including, telephone, telex, message relay, data transmission, facsimile, television, telematics, value-added network services, new business services, audio and video services, maritime and aeronautical communication services and other international
telecommunications services as are in use elsewhere or to be developed in the future.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Planning, establishing, developing, providing, operating and maintaining telecommunications systems and networks within India as are found necessary
for international telecommunications.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing and maintaining international leased telecommunication services.
| | - |  | --------------------------------------------------------------------------



| |  |  | Designing, developing, installing, maintaining and operating long distance domestic and international basic and value added telecommunications, global
mobile telecommunications, electronic mail services, globally managed data networks, data telecom networks, video conferencing, international gateway networks and satellite networks inside and outside India.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Raising necessary financial resources for its development needs for telecommunication services or facilities.
| | - |  | -------------------------------------------------------------------------------------------------------------

Directors

Borrowing Powers.
Subject to the provisions of the Indian Companies Act, the Board may authorize the Company to incur debt and grant security interests on the Companys Property on terms and conditions approved by the Board in its discretion.

Qualification; Retirement. A director need not hold any of the Companys Shares to qualify as a director. There is no mandatory retirement
for directors over a certain age, but the appointment / continuation of a director has to be approved either by the shareholders, by a special resolution or by the GoI.

Voting on Proposals. The Indian Companies Act specifies that a directors power to vote on a proposal, arrangement or contract in which the
director is materially interested should be through a disclosure to the Board by the concerned director of the nature of his concern or interest. Such disclosure can be made as a general notice to the Board, which notice of disclosure shall expire
at the end of the financial year in which it is given.

Voting Rights Attached to a Class of Shares. There are no voting rights to
decide on the eligibility of a retiring director to offer himself for re-election at staggered intervals. There is no concept of cumulative voting. The Indian Companies Act provides for two thirds of the total strength on the Board to be appointed
as directors to retire by rotation. Out of these retiring directors, one third shall retire every year at the Annual General Meeting. Such retiring directors are eligible to offer themselves for re-election.

Rights to Shares in the Companys Profits. There are no provisions entitling a shareholder or director to share in the Companys
profits. The shareholders are entitled to dividends (cash and/or stock) if recommended by the Board of Directors and approved by the shareholders.

Sinking Fund and Other Provisions. Subject to the Indian Companies Act, the Board may, before recommending any dividend, set apart out of the
profits of the Company such sums as they think proper as a reserve fund to meet contingencies, equalize dividends, pay special dividends, repair, improve and maintain any of the property of the Company, amortise capital or for such other purposes as
the Board shall, in its absolute discretion, think conducive to the interest of the Company.

Changing Rights of Shareholders. Our
shareholders can authorize the Company to issue new Shares upon such terms and conditions determined by our shareholders or the Board. Section 86 of the Indian Companies Act allows for the issuance of new shares with differential rights and
privileges with respect to voting, dividends or otherwise if the issuance is approved by the shareholders, but the Memorandum of Association of the Company would need to be amended and accordingly a new class of Shares could be issued. The Articles
of Association allow for variation of the rights attached to each class of Shares with it approved by a three-fourths majority of the Shares present and voting at a general meeting of that class as provided in the Indian Companies Act
(Section 106).



73



---

##### Table of Contents

Preventing Change of Control. The Articles of Association gives a technical right to the Board to
refuse a transfer of Shares by notice within two months of the date of receipt of a request for transfer. However, since the Shares are in dematerialized form, any change in ownership of the Shares would not require the approval of the Board. There
are no provisions in the Memorandum or Articles of Association discriminating against any existing or prospective holder of such Shares as a result of such holder owning a substantial number of Shares. However, such provisions are discussed later
under Takeover Code.

Dividends

The Companys shareholders may declare a dividend upon the recommendation of the Board. The amount of the dividend declared may not exceed the amount
recommended by the Board, although a lesser amount may be declared. Dividends are distributed and paid within 30 days of approval by the shareholders. The Board is also authorized under the Articles of Association to declare and pay interim
dividends to shareholders. In India, the stock exchange listing agreement requires that a dividend is to be disclosed on a per share basis.

Under the Indian Companies Act, dividends are payable only in cash to registered shareholders, the shareholders order or the shareholders
bankers order on a record date fixed prior to the relevant annual general meeting. The Indian Companies Act further provides that any dividends that remain unpaid or unclaimed after the 30-day period are to be transferred to a special bank
account opened by the Company at an approved bank. The Company transfers any dividends that remain unclaimed in the special bank account for seven years from the date of the transfer to an Investor Education and Protection fund established by the
GoI. Once transferred to this fund, such unclaimed dividends may not be claimed.

Dividends may be paid only out of profits of the Company for
the relevant year after transfer to the reserves of the Company of a percentage of its profits for that year of not less than 2.5% if the dividend is in excess of 10% of the par value of the Shares. The Indian Companies Act further provides that, in
the event of inadequacy or absence of profits in any year, a dividend may be declared for such year out of the Companys accumulated profits, subject to certain limitations.

Voting Rights

At any general meeting,
voting is by a show of hands (where each shareholder has one vote) unless a poll is demanded by at least 10% of those entitled to vote on the resolution, or those holding Shares with a paid-up value of at least Rs. 50,000. Upon a poll, every
shareholder entitled to vote and present in person or by proxy has one vote for every Share held by that shareholder. The Chairman has a deciding vote in the case of any tie.

Any shareholder of the Company may appoint a proxy. The instrument appointing a proxy must be lodged with the Company at least 48 hours before the time
of the meeting. A proxy is entitled to attend the meeting only in the absence of the shareholder and the proxy is not entitled to vote on a poll. In addition, a proxy is not entitled to participate in the discussions at the general meetings. A
corporate shareholder may appoint an authorized representative who may attend and participate in general meetings and vote in all respects as if a shareholder, both on a show of hands and upon a poll.

Ordinary resolutions may be passed by a simple majority of those present and voting at any general meeting of shareholders for which the required period
of notice has been given. However, certain resolutions, such as alteration or amendment of the Memorandum and Articles of Association, commencement of a new line of business, issuance of further Shares without preemptive rights and reduction of
share capital, require that the votes cast in favor of the resolution (whether by show of hands or upon a poll) be not less than three times the number of votes, if any, cast against the resolution by the members present in person or proxy and
voting at the meeting.

Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings, the Indian Companies Act permits a company to distribute an amount
transferred from the general reserve or other permitted reserves, including surplus in the Companys profit and loss account in the form of bonus Shares, to shareholders (similar to a stock dividend). The Indian Companies Act also permits the
issuance of bonus shares from a share premium account. Bonus shares are distributed to shareholders in the proportion recommended by the Board. Shareholders of record on a fixed record date are entitled to receive such bonus shares.



74



---

##### Table of Contents

Preemptive Rights and Issue of Additional Shares

The Indian Companies Act gives shareholders the right to subscribe for new Shares in proportion to their existing shareholdings unless otherwise agreed by
the shareholders. Under the Companies Act, in the event of an issuance of shares, subject to certain limitations, the Company must first offer such Shares to existing shareholders by notice specifying (1) the number of Shares offered and the
date within which the offer must be accepted, which may not be less than 15 days from the date of offer and (2) the right, exercisable by the shareholder, to renounce the shares offered in favor of any other person. The Board is entitled to
distribute the shares in respect of which preemptive rights have not been exercised in the manner that it deems most beneficial to the Company in accordance with the Articles of Association.

Meeting of Shareholders

The Company is
required to convene an annual general meeting of its shareholders in every calendar year, or within 15 months of the previous annual general meeting. The annual accounts of the Company are required to be disclosed to the shareholders at the annual
general meeting within six months of the end of the fiscal year. The Company may convene an extraordinary general meeting of shareholders when necessary, or at the request of a shareholder or shareholders holding not less than 10% of the paid-up
capital of the Company on the date of the request. The annual general meeting of the shareholders is generally convened by the Company Secretary upon a resolution of the Board. Written notice setting out the agenda of the annual general meeting must
be given to the shareholders whose names are on the register at the record date at least 21 days (excluding the day of service) prior to the date of the annual general meeting. Those shareholders who are registered as shareholders on the date of the
annual general meeting are entitled to attend or vote at such meeting.

The annual general meeting of shareholders must be held at the
registered office of the Company or some other place within the city in which the registered office is located. An Extraordinary General Meeting may, be held at any place determined by the Board.

The Articles of Association provide that a quorum for an annual general meeting is the presence of at least five shareholders, including a representative
of the President of India and Panatone Finvest Limited. In addition, the Articles of Association provide that the Board may, whenever it thinks fit and must, on the request of the holders of not less than one-tenth of the paid-up capital of the
Company that have the right to vote on such matter, convene an extraordinary general meeting of the Company. In the case of such a request:



| | 1) | The request must state the purpose of the meeting and must be signed by the petitioners.
| | -- | ----------------------------------------------------------------------------------------



| | 2) | If the Board does not proceed within 21 days from the date of the request to cause a meeting to be called on a day not later than 45 days from the date of the request,
the petitioners or a majority of them in value may themselves convene the meeting, but any meeting so convened must be held within 3 months from the date of the request.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | Any meeting convened under the Articles of Association must be convened in as nearly the same manner as possible as that in which meetings are convened by the Board.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Register of Shareholders; Record Dates; Transfer of Shares

The Companys share transfer agent maintains a register of shareholders of the Company. For the purpose of determining Shares entitled to annual
dividends, the register is closed for a specified period prior to the annual general meeting. The date on which this period begins is the record date. To determine which shareholders are entitled to specified shareholder rights, the Company may
close the register of shareholders. The Indian Companies Act and the Companys listing agreement with the BSE (and the other Indian stock exchanges) permit the Company, pursuant to a resolution of the Board and upon at least 7 days
advance notice to the BSE (and such other Indian stock exchanges), to set the record date and upon 7 days public notice to close the register of shareholders for not more than 30 days at a time, and not more than 45 days in a year, in order
for the Company to determine which shareholders are entitled to certain rights pertaining to the Shares. Trading of Shares may, however, continue while the register of shareholders is closed.

Following introduction of the Depositories Act, 1996, and the repeal of Section 22A of the Securities Contracts (Regulation) Act, 1956, which
enabled companies to refuse to register transfers of shares in certain circumstances, the shares of a company are freely transferable, subject only to the provisions of Section 111A of the Indian Companies Act. Pursuant to Section 111A, if
the transfer of shares is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992, or the regulations issued thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985, or any other Indian
laws, the Company Law Board (a statutory body which administers various laws affecting companies in India) may, on application made by an investor, SEBI or certain other parties, direct the rectification of the register of records. The Company Law
Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant shares before making or completing its inquiry into the alleged contravention.

Pending such inquiry, the rights of a holder to transfer the shares would not be restricted, although the voting rights attached to the shares may remain
suspended if the Company Law Board so orders.



75



---

##### Table of Contents

Transfer of Shares of the Company is effected by an instrument of transfer in the form prescribed by the
Indian Companies Act and the rules made thereunder, together with delivery of the share certificates. The share transfer agent of the Company is Sharepro Services (India) Pvt. Ltd, located in Mumbai, India, which is duly licensed to carry on such
business under the Securities & Exchange Board of India (Registrar & Share Transfer Agents) Rules. The above procedure is not applicable where the Shares are dematerialized and transferred electronically. To encourage
dematerialization of securities in India, SEBI has required certain types of securities of certain Indian companies to be traded and settled in book-entry form. The Shares of the Company have been designated as one of such securities. To
effect transfer of Shares in book-entry form, the seller and purchaser must establish accounts with a depositary participant appointed by the National Securities Depositary Limited or Central Securities Depositary Limited, a depositary established
pursuant to the Indian Depositories Act, 1996. Charges for opening an account with a Securities Depositary Limited participant, transaction charges for each trade and custodian charges for securities held in each account vary depending upon the
business practice of each Securities Depositary Limited participant. Upon delivery, the Shares purchased will be registered in the name of the Securities Depositary Limited participant and held by such Securities Depositary Limited participant for
the account of the purchaser. So long as the Shares are traded through the book-entry system of Securities Depositary Limited, ownership of beneficial interests in the Shares will be shown on, and transfer of such ownership will be effected only
through, records maintained by Securities Depositary Limited participants.

The requirement for dematerialization of the Shares may apply to
the ADR holders when the underlying Shares are withdrawn from the depositary facility upon surrender of the ADRs. In order to trade the underlying Shares in the Indian market, the withdrawing ADR holder will be required to hold such Shares in
book-entry form and to comply with the Securities Depositary Limited procedures described above. If dematerialization of any underlying Shares is requested by an ADR holder, the cost incurred by the Depositary therefore will be borne by the
withdrawing ADR holder. Transfer of Shares in book-entry form is not subject to any Indian transfer tax. See Item 10TaxationIndian Taxation.

Disclosure of Ownership Interest

Section 187C of the Indian Companies Act requires beneficial owners of shares of Indian companies who are not holders of record to declare to the
Company details of the beneficial owner. While it is unclear under Indian law whether Section 187C applies to holders of ADRs of a company, investors who exchange ADRs for shares are subject to Section 187C. Failure to comply with
Section 187C would not affect the obligation of a company to register a transfer of shares or to pay any dividends to the registered holder of any shares in respect of which such declaration has not been made, but any person who fails to make
the required declaration within 30 days may be liable for a fine of up to Rs. l,000 for each day until such failure continues. Furthermore, any charge, promissory note or any other collateral agreement created, executed or entered into by the
registered owner of any share in respect of which a declaration is required under Section 187C has not been made is not enforceable by the beneficial owner or any person claiming through him.

Audit and Annual Report

The Company
must circulate, at least 21 days before an annual general meeting of shareholders, a detailed version of the Companys audited balance sheet and profit and loss account and the reports of the Board and the auditors thereon. The Company is also
required under the Indian Companies Act to make available, upon the request of any shareholder, a complete balance sheet and profit and loss account of the Company in the case of circulation of abridged accounts.

Under the Indian Companies Act, the Company must file with the Indian Registrar of Companies the balance sheet and annual profit and loss account
presented to the shareholders within 30 days and an annual return within 60 days, of the conclusion of an annual general meeting.

Approval of Matters

(a) Under the SHA, the following would have to be approved by an affirmative vote of the one authorized representative of both the GoI and Panatone
Finvest Limited, and at the meeting of the Board, by an affirmative vote of at least one nominee director of each of the GoI and Panatone Finvest Limited:

(i) Any change in the Memorandum of Association and Articles of Association;



76



---

##### Table of Contents

(ii) The granting of any security or the creation of any encumbrance on the assets of the
Company or the incurrence of any indebtedness or the guaranteeing of the debts of any person which in the aggregate at any time exceeds the net worth of the Company;

(iii) The taking of any steps to wind-up or terminate the corporate existence of the Company or any of its affiliates or entering into any
arrangement with the creditors of the Company in relation to all or a substantial part of the assets of the Company;

(iv) Any
one or a series of transactions which causes a sale, lease, exchange or disposition of land and buildings of the Company or its subsidiaries which are acquired by the Company at any time prior to the Closing (as defined in the SHA);

(v) Subject to (xv) hereunder, any sale, lease, exchange or disposition of any property, assets or equipments (other than land and
buildings) of the Company or its subsidiary which are acquired by the Company at any time prior to the Closing;

(vi) The
making, directly or indirectly, of loans or advances in excess of Rs.500 million to any person other than in the ordinary course of the business of the Company;

(vii) The entering into of an amalgamation, merger or consolidation with any other company or corporate body;

(viii) Any change in the number of directors of the Company from that provided in the SHA;

(ix) Any agreement with or commitment to any shareholder or its principal(s) or their respective affiliates, except where, and to the
extent, (a) such agreement or commitment between the Company or any of its affiliates on the one hand and the GoI or any government authority on the other is required under applicable law or (b) such agreement is on an arms length
basis and in good faith;

(x) Establishment of any subsidiary or associated company by the Company;

(xi) Transfer of any rights or interests in affiliates of the Company including, without limitation, transfer of relevant interests in
securities of such affiliates held by the Company;

(xii) Any agreement, license or permission in respect of the use of the
name and/or logo of the Company (except where such agreement, license or permission is for the purpose of, or in connection with, advertising or promotional activities only by the Company);

(xiii) The delegation by the Board to any person of the Boards authority to approve or authorize any matter described in this
sub-paragraph (a);

(xiv) Change directly or indirectly in the use of land and buildings of the Company other than for the
purposes of the main objects of the Company as defined in the Memorandum of Association;

(xv) Any one or a series of
transactions, which causes a sale, lease, exchange or disposition of obsolete equipment or equipment not in use of the Company or its subsidiaries having an aggregate value exceeding 25% of the total value of the net fixed assets of the Company as
specified in the Audited Financial Statements; or

(xvi) Any commitment or agreement to do any of the foregoing.

(b) Notwithstanding anything to the contrary contained in the SHA, in the event any of the aforesaid items of business mentioned in (a) above is not
approved by the Board or shareholders at a meeting or otherwise, then such non-approved items shall not be implemented by the Company. Panatone Finvest Limited and the GoI shall not directly or indirectly take any steps to cause the Company to
implement such items of business. The non-approval of the aforesaid items of business at a meeting or otherwise of the Board or the shareholders shall not be considered as a subject matter of dispute, difference, disagreement or the like between the
Government of India and Panatone Finvest Limited and the non-approval of such item of business will not be referred to arbitration under the SHA.



77



---

##### Table of Contents

Acquisition by the Company of its Own Shares

Under the Indian Companies Act, approval of at least 75% of a companys shareholders voting on the matter and approval of the High Court or National
Company Law Tribunal of the state in which the registered office of the company is situated is required to reduce a companys share capital. A company may, under some circumstances, acquire its own shares without seeking the approval of the
High Court or National Company Law Tribunal. However, a company would have to extinguish the shares it has so acquired within the prescribed time period. A company is not permitted to acquire its own shares for treasury operations.

An acquisition by a company of its own shares that does not rely on an approval of the High Court/National Company Law Tribunal must comply with the
Indian Companies Act. In addition, public companies which are listed on a recognized stock exchange in India must comply with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, or (Buy-back Regulations).

ADR holders will not be eligible to participate in a buyback in the case of tender offers, odd lots and open market purchases unless they
surrender their ADSs and receive delivery of the underlying Shares. ADR holders should note that Shares withdrawn from the depositary facility may not be re-deposited into such depositary facility.

There can be no assurance that the underlying Shares offered by the ADR holders in any buyback of Shares by the Company will be accepted by the Company.
The regulations relating to the buyback of securities have only been introduced recently and there is very limited guidance on the interpretation of such regulations. ADR holders are advised to consult their Indian legal advisers prior to
participating in any buyback by the Company, including in relation to any tax issues relating to such buyback.

Foreign institutional
investors should note that in the event of a buyback by the Company, the prescribed threshold limit for shareholdings by foreign institutional investors may be exceeded by default regardless of any participation or non-participation by them in the
buyback. The treatment of the foreign institutional investors threshold limits in the buyback context is uncertain, and foreign institutional investors are advised to consult their Indian legal advisers in this regard.

Liquidation Rights

Subject to the rights of creditors, employees and of the holders of any other shares entitled by their terms to preferential repayment over the Shares, if
any, in the event of a winding-up of the Company, the holders of the Shares are entitled to be repaid the amounts of capital paid-up or credited as paid-up on such Shares. All surplus assets after payments due to the holders of any preference shares
belong to the holders of the Shares in proportion to the amount paid-up or credited as paid-up on such Shares, respectively, at the commencement of the winding-up.

Takeover Code

Disclosure and mandatory
bid obligations in respect of certain share acquisitions or consolidations under Indian law are governed by the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover
Code). The Takeover Code is under constant review by SEBI and is amended from time to time.

The most important features of the Takeover
Code are as follows:



| |  |  | Any acquirer who acquires more than 5%, 10%, 14%, 54% or 74% of the shares or voting rights in a company must disclose its aggregate shareholding or
voting rights to that company and to each of the stock exchanges on which that companys shares are listed.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A person who holds more than 15% of the shares or voting rights in any company is required to make, within 21 days from the financial year ended
March 31, annual disclosure of its holdings to that company (which in turn is required to disclose the same to each of the stock exchanges on which the companys shares are listed within 30 days from the financial year ended March 31,
as well as the record date of the company for the purposes of declaration of a dividend).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Promoters or persons in control of a company are also required to make annual disclosure in respect of their holdings in the same manner within 21 days
from the financial year ended March 31, as well as the record date of the company for the purpose of a declaration of a dividend.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

With respect to takeovers (other than bail-out takeovers) of listed companies, the Takeover Code, as amended, provides for mandatory bid and open offer
requirements, summarized below:



| |  |  | An acquirer cannot acquire shares or voting rights which (taken together with existing shares or voting rights, if any, held by it or by persons acting
in concert with it) would entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a public announcement offering to acquire an additional 20% of the shares of the company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



78



---

##### Table of Contents

| |  |  | An acquirer who, together with persons acting in concert with it, holds between 15% and 55% of the shares or voting rights of a company cannot acquire
additional shares or voting rights that would entitle it to exercise more than 5% of the voting rights in any financial year ended on March 31, unless such acquirer makes a public announcement offering to acquire an additional 20% of the shares
of the company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Any further acquisition of shares or voting rights by an acquirer who holds 55% of the shares or voting rights in a company triggers the same public
announcement requirements. Such acquirer, however, may without making a public announcement under these Regulations, acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him
up to 5% voting rights in the target company subject to the following:-
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the acquisition is made through open market purchase in normal segment on the stock exchange but not through bulk deal /block deal/ negotiated deal/
preferential allotment; or the increase in the shareholding or voting rights of the acquirer is pursuant to a buy back of shares by the target Company; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the post acquisition shareholding shall not increase beyond 75%.
| | - |  | ----------------------------------------------------------------



| |  |  | In addition, regardless of whether there has been any acquisition of shares or voting rights in a company, an acquirer acting in concert cannot
directly or indirectly acquire control over a company unless such acquirer makes a public announcement offering to acquire a minimum of 20% of the shares of the company. The change of control for the purpose of this act excludes those which take
place pursuant to a special resolution passed by the shareholders in a general meeting.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Takeover Code sets out the
contents of the required public announcements as well as the minimum offer price.

The Takeover Code, as amended, permits conditional offers
as well as the acquisition and subsequent delisting of all shares of a company and provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and of the board of directors of the target
company in the offer process have also been set out in the Takeover Code. In addition, the Takeover Code introduces the chain principle whereby the acquisition of a holding company will obligate the acquirer to make a public offer to the
shareholders of each of the publicly listed companies acquired through the acquisition of the holding company.

The general requirement to make
a public announcement does not, however, apply entirely to bail-out takeovers when a promoter (i.e., a person or persons in control of the company, persons named in any offer document as promoters and certain specified corporate bodies and
individuals) is taking over a financially weak company (but not a sick industrial company) pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled bank. A financially weak company is a
company which has, at the end of the previous fiscal year, accumulated losses resulting in the erosion of more than 50% (but less than 100%) of the total sum of its paid-up capital and free reserves at the end of the previous fiscal year. A
sick industrial company is a company registered for more than five years and engaged in an industry listed in Schedule 1 of the Industries (Development & Regulation) Act, 1951 which has, at the end of any fiscal year,
accumulated losses equal to or exceeding its entire net worth.

The Takeover Code does not apply to certain situations, including but not
limited to:



|(a) | allotments of shares pursuant to an application made for a public issue;
|--- | ------------------------------------------------------------------------



|(b) | allotments of shares pursuant to an application made by a shareholder for a rights issue; and
|--- | ---------------------------------------------------------------------------------------------



|(c) | allotments of shares to the underwriters pursuant to any underwriting agreement.
|--- | --------------------------------------------------------------------------------

In addition, the Takeover Code does not apply to shares represented by ADSs so long as such shares remain in the ADR depositary facility.

The Company has entered into a listing agreement with each of the other Indian Stock Exchanges on which the Shares are listed. Clause 40A of the listing
agreements provides that if an acquisition of a listed companys Shares results in the acquirer and its associates holding 5% or more of a companys outstanding shares, the acquirer must report its holding to the company and the relevant
stock exchange(s) where the companys shares are listed. When any person acquires or agrees to acquire shares exceeding 15% of the voting rights in any company or if any person who holds shares which in aggregate carries less than 15% of the
voting rights of the Company and seeks to acquire shares exceeding 15% of the voting rights, such person shall, in accordance with Clause 40B, not acquire any Shares exceeding 15% of the voting rights of the company without making an offer on a
uniform basis to all the remaining shareholders to acquire Shares that have an additional 20% of the voting rights of the total outstanding shares at a prescribed price.



79



---

##### Table of Contents

The acquisition of shares of a company listed on an Indian stock exchange beyond certain threshold amounts
is subject to regulations governing takeovers of Indian companies. Clauses 40A and 40B and such regulations will not apply to shares so long as they are represented by ADRs.

Material Contracts

The Companys
material contracts are entered into in the ordinary course of business and include rate sharing agreements and interconnect agreements with international and domestic telecommunication providers and agreements for the use of cable capacity to
provide the Companys services.

Disclosure of Pledged Shares

A promoter or every person forming part of the promoter group shall, within 7 working days from the date of creation of pledge on shares of that company
held by him, inform the details of such pledge of shares to that company. Further a promoter or every person forming part of the promoter group of any company shall, within 7 working days from the date of invocation of pledge on shares of that
company pledged by him, inform the details of invocation of such pledge to that company.

The company shall in turn disclose the information
received as above to the stock exchanges on which the shares of company are listed, within 7 working days of the receipt thereof, if, during any quarter ending March, June, September and December of any year:



| |  |  | the total number of shares pledged during the quarter along with the shares already pledged exceeds 25,000
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | or 1% of the total paid up capital of the company
| | - |  | -------------------------------------------------

whichever is lower.

Restriction on issue
of shares with superior rights

The Securities & Exchange Board of India amended the Listing Agreement in July 2009 to incorporate
a restriction on issue by a listed company of shares in any manner which may confer on any person, superior rights as to voting or dividends vis-à-vis the rights on equity shares that are already listed.

Exchange Controls and Other Limitations Affecting Security Holders

Foreign investments in India are governed by the provisions of Section 6 of the Foreign Exchange Management Act (FEMA) 1999 and are
subject to the regulations issued by the Reserve Bank of India (RBI) under FEMA 1999.

The Foreign Direct Investment Scheme under
the Reserve Banks Automatic Route enables Indian companies (other than those specifically excluded in the scheme) to issue shares to persons resident outside India without prior permission from the RBI, subject to certain conditions. General
permission has been granted to nonresidents / NRIs for acquisition of shares by way of transfer as follows:

a. Sale / Gift of shares by
Non-Resident to Non-Resident including NRI:A person resident outside India (other than an NRI and OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident outside India (including NRIs).

b. Sale / Gift of share by NRI to NRI:NRIs may transfer by way of sale or gift the shares or convertible debentures held by them to another NRI.

In both the above cases, if the transferee has an existing venture or tie-up in India as on January 12, 2005, through an
investment/technical collaboration / trade mark agreement in the same field in which the Indian company, whose shares are transferred, is engaged, he has to obtain prior permission of Secretariat of Indiustrial Assistance (SIA)/Foreign Investment
Promotion Board (FIPB) to acquire the shares. This restriction is, however, not applicable to the transfer of shares for investments to be made by Venture Capital Funds registered with SEBI; investments by multinational financial institutions; or
where the existing joint venture investment by either of the parties is less than 3 per cent; or where the existing joint venture / collaboration is defunct or sick or for a transfer of shares of an Indian company engaged in the Information
Technology sector or in the mining sector, if the existing joint venture or technology transfer/trade mark agreement of the person to whom the shares is to be transferred are also in the Information Technology sector or in the mining sector for same
area/mineral.



80



---

##### Table of Contents

c. Gift from Non Resident to Resident:A person resident outside India can transfer any security to a
person resident in India by way of gift.

d. Sale of Shares by Non-resident on the Stock Exchange:A person resident outside India can
sell the shares and convertible debentures of an Indian company on a recognized Stock Exchange in India through a stock broker registered with stock exchange or a merchant banker registered with SEBI.

e. Sale of shares by Resident to Non-resident: A person resident in India can transfer by way of sale shares / convertible debentures (including
transfer of subscribers shares), of an Indian company in sectors other than the financial services sector (i.e. Banks, Non Banking Financial Companies (NBFC), Insurance, Asset Resconstruction Companies (ARCs), Credit Information Companies
(CICs), infrastructure companies in the securities market viz. Stock Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.) under private arrangement to a person resident outside India, subject to the guidelines under master
circular no.13/210-11 dated July 1, 2010 issued by the Reserve Bank of India on Foreign Direct Investments in India.

f. Sale of
shares by Non-Resident to Resident  Private arrangement:General permission is also available for a transfer of shares / convertible debentures by way of sale under private arrangement by a person resident outside India to a person
resident in India, subject to the guidelines under master circular no.13/210-11 dated July 1, 2010 issued by the Reserve Bank of India on Foreign Direct Investments in India.

g. The above General Permission also covers transfer by a resident to a non-resident of shares / convertible debentures of an Indian company, engaged in
an activity earlier covered under the Government Route but now falling under the automatic Route of the Reserve Bank, as well as a transfer of shares by a non-resident to an Indian company under a buyback and / or capital reduction scheme of the
company. However, this General Permission is not available in the case of a transfer of shares / debentures, from a Resident to a Non- Resident / Non-Resident Indian, of an entity engaged in any activity in the financial services sector (i.e. Banks,
NBFCs, ARCs, CICs, Insurance, infrastructure companies in the securities market such as Stock Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.).

With effect from November 29, 2001, Overseas Corporate Bodies (OCBs) are not permitted to invest under the Portfolio Investment Scheme
in India. Further, the OCBs which have already made investments under the Portfolio Investment Scheme, may continue to hold such shares / convertible debentures until such time as these are sold on the stock exchange.

In all other cases not covered in the above paragraph, prior approval of the RBI is necessary. For transfers of existing shares or convertible debentures
of an Indian company by a resident to a non-resident by way of sale, the transferor should obtain the approval of the GoI and thereafter make an application to the RBI for permission. In such cases the RBI may permit the transfer subject to certain
terms and conditions including the price at which the sale may be made.

Restrictions on a Sale of the Shares Underlying the Companys
American Depositary Receipts and Repatriation of the Sale Proceeds

American Depositary Receipts (ADR(s)) issued by Indian
companies to non-residents have free transferability outside India. The GoI has recently permitted two-way fungibility of ADRs. However, this is still subject to sectoral caps and certain conditions, including compliance with the provisions of the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme 1993 and the periodic guidelines issued by the GoI. Such restrictions on foreign ownership of the underlying Shares may cause the
Companys Shares to trade at a discount or premium to its ADSs.

In February 2002, the RBI issued a circular stating that the terms of
Regulations 4A of the Reserve Bank of India Notification FEMA 20/2000-RB dated May 3, 2000, as amended by Notification No. FEMA 41/2001-RB dated March 2, 2001, allow a registered broker to purchase shares of an Indian company on behalf of
a person resident outside India for the purpose of converting those shares into ADSs/GDSs. However, such conversion is subject to compliance with the provisions of the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depository Receipt Mechanism) Scheme 1993 and the periodic guidelines issued by the GoI. This would mean that ADSs converted into Indian shares may be converted back into ADSs, subject to the limits of sectoral caps.

The Operative Guidelines for the limited two-way fungibility under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depository Receipt Mechanism) Scheme 1993 has also been approved by the GoI.



81



---

##### Table of Contents

These guidelines provide that a re-issuance of ADSs/GDSs are permitted to the extent that ADSs/GDSs have
been redeemed for underlying shares and sold in the domestic market. The re-issuance must be within specified limits. The conditions to be satisfied in this regard are: (i) the shares are purchased on a recognized stock exchange; (ii) the
Indian company has issued ADS/GDS; (iii) the shares are purchased with the permission of the custodian of the ADSs/GDSs of the Indian company and are deposited with the custodian; and (iv) the number of shares so purchased shall not exceed
the number of ADSs/GDSs converted into underlying shares.

The procedure for conversion of shares into ADSs/GDSs is as follows: (i) on
request by the overseas investor for the acquisition of shares for re-issuance of ADSs/GDSs, the SEBI registered broker will purchase shares from a stock exchange after verifying with the custodian as to the availability of head room
(i.e. the number of ADSs/GDSs originally issued minus the number of ADSs/GDSs outstanding further adjusted for ADSs/GDSs redeemed into underlying shares and registered in the name of the non-resident investor(s)); (ii) an Indian broker
purchases the shares in the name of the overseas depositary; (iii) after the purchase, the Indian broker places the domestic shares with the custodian; (iv) the custodian advises the overseas depositary on the custody of domestic shares
and to issue corresponding ADSs/GDSs to the investor; and (v) the overseas depositary issues ADSs/GDSs to the investor. Holders who seek to sell in India any Shares received upon surrender of any ADS, and to convert the Rupee proceeds of such
sale into foreign currency and remit such foreign currency outside of India, will require the approval of the Reserve Bank of India for each such transaction. Although such approvals are generally forthcoming, there can be no assurance that any such
approval can be obtained in a timely manner or at all.

In order to bring the ADR/GDR guidelines in alignment with SEBIs guidelines on
domestic capital issues, the Government of India has issued the following additional guidelines on ADRs/GDRs under the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993.

An Indian company which is not eligible to raise funds from the Indian Capital Market, including a company which has been restrained from accessing the
securities market by the Securities and Exchange Board of India (SEBI), is not eligible to issue (i) Foreign Currency Convertible Bonds (FCCBs) and (ii) Ordinary Shares through Global Depositary Receipts under the Foreign
Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993.

Erstwhile Overseas Corporate Bodies
(OCBs) who are not eligible to invest in India through the portfolio route and entities prohibited to buy, sell or deal in securities by SEBI will not be eligible to subscribe to (i) Foreign Currency Convertible Bonds and
(ii) Ordinary Shares through Global Depositary Receipts under the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993.

The pricing of ADR/GDR/FCCB issues must be made at a price not less than the higher of the following two averages: (i) the average of the weekly
high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date and; (ii) the average of the weekly high and low of the closing prices of the related shares quoted on a
stock exchange during the two weeks preceding the relevant date. The relevant date means the date thirty days prior to the date on which the annual meeting of the shareholders is held, as required by section 81 (IA) of the Indian
Companies Act, 1956, to consider the proposed issue.

General

Shares of Indian companies represented by ADSs may be approved for issuance to foreign investors by the Government of India under the Issue of Foreign
Currency Convertible Bonds and Shares (through Depositary Receipt Mechanism) Scheme, 1993 (the 1993 Regulation), as modified from time to time, promulgated by the Government. The 1993 Regulation is distinct from other policies or
facilities, as described below, relating to investments in Indian companies by foreign investors. The issuance of ADSs pursuant to the 1993 Regulation also affords to holders of the ADSs the benefits of Section 115AC of the Indian Income Tax
Act, 1961 for purposes of the application of Indian tax law.

Foreign Direct Investment (FDI)

FDI in India is allowed automatically and without prior approval in almost all sectors, except:

1. proposals that require an industrial license and cases where foreign investment is more than 24% in the equity capital of units manufacturing items
reserved for the small scale industries;

2. proposals in which the foreign collaborator has a previous venture in India;

3. transfers of shares from resident to non-residents and vice versa; and



82



---

##### Table of Contents

4. proposals falling outside notified sectoral policy/ caps or under sectors in which FDI is not permitted
and/or whenever any investor chooses to make an application to the Foreign Investment Promotion Board (FIPB) and not avail itself of the automatic route.

The FIPB is the body that considers and recommends FDI that does not fall within the automatic route. The FIPB is part of the Department of Economic
Affairs, Ministry of Finance. With respect to the activities of the Company, approval from the FIPB is required for any direct foreign investment that exceeds 51% of the total issued share capital of the Company.

In May 1994, the GoI announced that purchases by foreign investors of ADSs, as evidenced by ADRs and foreign currency convertible bonds of Indian
companies, would be treated as direct foreign investment in the equity issued by Indian companies for such offerings. Therefore, offerings that involve the issuance of equity that results in foreign direct investors holding more than the stipulated
percentage of direct foreign investments (which depends on the category of industry) would require approval from the FIPB. In addition, in connection with offerings of any such securities to foreign investors, approval of the FIPB is required for
Indian companies whether or not the stipulated percentage limit would be reached, if the proceeds therefrom are to be used for investment in non-high priority industries.

The FDI ceiling in the telecom sector varies from 49% to 74% depending on the nature of the service being provided. The total composite foreign holding,
including but not limited to investment by FIIs (holding as on March 31), NRI/OCB, FCCB, ADRs, GDRs, convertible preference shares, convertible currency debentures, and proportionate foreign investment in Indian promoters/investment companies
including their holding companies, may not exceed the allowable percentage.

Foreign investment through investing Indian companies in the
subject Indian companies shall be computed as indirect foreign investment. In the event the subject Indian companies are owned or controlled by non-resident entities (i.e., where resident Indian citizens do not own and/or control more than 50% of
the equity interest and do not have power to appoint a majority of the directors of the company) then the entire investment shall be computed as indirect foreign investment. However, the indirect foreign investment in the 100% owned subsidiaries of
operating-cum-investing/investing companies shall be limited to the foreign investment in the operating-cum-investing/investing company, since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by
the holding company and the downstream investment should be a mirror image of the holding company.

FDI up to 100% is permitted in respect of
the following telecom services:-

(i) infrastructure providers providing dark fiber (IP Category I);

(ii) electronic mail; and

(iii) voicemail.

Regardless of
whether the FDI limit is 74% or 49%, the following apply to all FDI in the telecom sector:



| |  |  | Direct and indirect foreign investments in telecom companies may not exceed 74%.
| | - |  | --------------------------------------------------------------------------------



| |  |  | The Indian shareholding may not be less than 26% of all telecom companies.
| | - |  | --------------------------------------------------------------------------



| |  |  | The status of foreign holdings must be declared to the Government on a half-yearly basis.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | A majority of directors of telecom companies, the chief officer in charge of technical network operations, the chief security officer and the
officers/officials dealing with the lawful interception of messages shall be resident Indian citizens. The chairman, managing director, chief executive officer and/or chief financial officer, if foreign nationals, must be security vetted by the
Ministry of Home Affairs (MHA). Security vetting is required annually.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | No telecom company may transfer any accounting information, user information or details of network and infrastructure to any person or place outside
India.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Each telecom company must provide traceable identities of their subscribers.
| | - |  | ----------------------------------------------------------------------------



| |  |  | No traffic originating and terminating in India may be routed outside India.
| | - |  | ----------------------------------------------------------------------------



| |  |  | Remote access to networks may only be provided to approved location(s) abroad through approved location(s) in India.
| | - |  | --------------------------------------------------------------------------------------------------------------------



83



---

##### Table of Contents

| |  |  | Privacy of voice and data must be maintained and monitoring may only be done on authorization by the Union / State Home Secretaries.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Telecom companies provide monitoring facilities to the GoI from a centralized location.
| | - |  | ---------------------------------------------------------------------------------------

The Company has obtained the permission for Remote Access of its network equipments from DOT. Some applications for seeking permission for Remote Access
were made recently and the approval is awaited.

Investment by Non-Resident Indians, Persons of Indian Origin and Overseas Corporate Bodies

A variety of special facilities investing in shares of Indian companies in India are available to individuals of Indian nationality or
origin residing outside India and persons of Indian origin.

These facilities permit non-resident Indians and persons of Indian origin to make
portfolio investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors. These facilities are different and distinct from investments by foreign direct investors described above.

The Overseas Corporate Bodies (OCBs) at least 60% owned by non-resident Indians or persons of Indian origin have been since
September 16, 2003 derecognized as a class of investors in India. However, requests from such entities which are incorporated and not under the adverse notice of RBI/SEBI will be considered for undertaking fresh investments under the FDI scheme
with prior approval of the GoI if the investment is under the approval route and with the prior approval of RBI if the investment would be made under the automatic route.

Investment by Foreign Institutional Investors

In September 1992, the GoI issued guidelines which enable foreign institutional investors, including institutions such as pension funds, investment
trusts, asset management companies, nominee companies and incorporated / institutional portfolio managers, to invest in all the securities traded on the primary and secondary markets in India. Under the guidelines, foreign institutional investors
are required to obtain an initial registration from SEBI and a general permission from the Reserve Bank of India to engage in transactions regulated under the Foreign Exchange Management Act of 1999. Foreign institutional investors must also comply
with the provisions of the SEBI Foreign Institutional Investors Regulations, 1995. When they receive the initial registration, foreign institutional investors also obtain general permission from the Reserve Bank of India to engage in transactions
regulated under the Foreign Exchange Management Act of 1999. Together, the initial registration and the Reserve Bank of Indias general permission enable registered foreign institutional investors to buy (subject to the ownership restrictions
discussed below) and sell freely securities issued by Indian companies, to realize capital gains on investments made through the initial amount invested in India, to subscribe or renounce rights offerings for shares, to appoint a domestic custodian
for custody of investments held and to repatriate the capital, capital gains, dividends, and income received by way of interest and any compensation received towards sale or renunciation of rights offerings of shares.

Ownership Restrictions

SEBI and the
Reserve Bank of India regulations restrict investments in Indian companies by foreign direct investors. Under current SEBI regulations applicable to the Company, foreign direct investors in aggregate may hold no more than 40% of the Companys
Shares, excluding the Shares underlying the ADSs, and Non-Resident Indians in aggregate may hold no more than 10% of the Companys Shares, excluding the Shares underlying the ADSs. Furthermore, SEBI regulations provide that no single foreign
institutional investor may hold more than 10% of the Companys total Shares and no single non-resident Indian may hold more than 5% of the Companys total Shares.

Foreign institutional investors may only purchase securities of public Indian companies (other than ADSs) through a procedure known as a
preferential allotment of shares, which is subject to certain restrictions. These restrictions will not apply to Shares issued as stock dividends or in connection with rights offerings applicable to the Shares underlying ADSs. There is
uncertainty under Indian law about the tax regime applicable to Foreign Institutional Investors which hold and trade ADSs. Foreign Institutional Investors are urged to consult with their Indian legal and tax advisers about the relationship between
the Foreign Institutional Investors guidelines and the ADSs and any Shares withdrawn upon surrender of ADSs.

More detailed provisions
relating to foreign institutional investors investments have been introduced by the SEBI with the introduction of the SEBI Foreign Institutional Investors Regulations, 1995. These provisions relate to the registration of foreign institutional
investors, their general obligations and responsibilities, and certain investment conditions and restrictions. One such restriction is that the total investment in equity and equity-related instruments should not be less than 70% of the aggregate of
all investments of the foreign institutional investors in India.



84



---

##### Table of Contents

SEBI-registered foreign institutional investors have been permitted to purchase shares / convertible
debentures of an Indian company through offer/private placement. This is subject to investment ceilings prescribed under the Foreign Exchange Management Act. Indian companies are permitted to issue such shares provided that: (i) in the case of
a public offer, the price of shares to be issued is not less than the price at which shares are issued to residents and (ii) in the case of an issue by private placement, the price is not less than the price arrived at in terms of SEBI
guidelines or guidelines issued by the erstwhile Controller of Capital Issues, as applicable. Purchases can also be made of Partly Convertible Debentures/ Fully Concertible Debentures/ Right Renunciations/Warrants/Units of Domestic Mutual Fund
Schemes.

Foreign institutional investors may not engage in short selling and must take delivery of securities purchased and give delivery of
securities sold. There may not be any squaring off of transactions during the no-delivery period of a security.

The foreign institutional
investors may form a 100% debt fund and get such fund registered with SEBI. Investment in debt securities by foreign institutional investors are subject to limits, if any, stipulated by SEBI in this regard.

Voting Rights

Holders of the
Companys ADSs will not be entitled to instruct the Depositary how to vote the Shares underlying the ADSs. Rather, each holder, by accepting an ADR, authorized and directed the Depositary to vote as set forth below.

The Depositary will vote the deposited Shares as instructed by the Board or give a proxy or power of attorney to vote the deposited Shares to a person
designated by the Board. However, the Depositary will only do this upon the Companys legal counsel issuing an opinion to the Depositary stating that it is legal for the Depositary to do so and that doing so will not expose the Depositary to
legal liability. If the Company does not provide the legal opinion referred to above, the Depositary will not vote the deposited Shares or give a proxy or power of attorney to anyone else to vote the deposited Shares.

Taxation

Indian Taxation

General.

The following summarizes the material Indian tax consequences for investors in ADSs and Shares received upon redemption of ADSs who are non-residents as
defined in the Indian Income Tax Act, 1961 (Indian Tax Act), whether of Indian origin or not, who acquire ADSs or Shares (upon redemption) and who hold such ADSs or Shares (upon redemption) as capital assets, and does not address the tax
consequences which may be relevant to other classes of non-resident investors, including dealers. This is primarily based on the provisions of the Indian Tax Act, including the special tax regime contained in Section 115AC (the Section
115AC Regime), read with the Finance Act for the relevant year, Finance (No.2 Act), 2004 and the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 (Scheme). A non-resident
investor has an option to be governed by the provisions of the Act or the provisions of a tax treaty that India has entered into with another country of which the non-resident investor is a tax resident, whichever is more beneficial.

The summary set forth below is not intended to constitute a complete analysis of the individual tax consequences to non-resident holders under Indian law
for the acquisition, ownership and sale of ADSs and Shares by non-resident holders. Personal tax consequences of an investment may vary for investors in various circumstances and potential investors should therefore consult their own tax advisers on
the tax consequences of such acquisition, ownership and sale, including specifically the tax consequences under the law of the jurisdiction of their residence and any tax treaty between India and their country of residence.

Residence

For
purposes of the Indian Tax Act, an individual is considered to be a resident of India during any fiscal year if he or she is in India in that year for:



| |  |  | a period or periods amounting to 182 days or more; or
| | - |  | -----------------------------------------------------



| |  |  | 60 days or more if within the four preceding years he/she has been in India for a period or periods amounting to 365 days or more; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



85



---

##### Table of Contents

| |  |  | 182 days or more, in the case of a citizen of India or a person of Indian origin living abroad who visits India and within the four preceding years has
been in India for a period or periods amounting to 365 days or more; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 182 days or more, in the case of a citizen of India who leaves India for the purpose of employment outside India in any previous year and has within
the four preceding years been in India for a period or periods amounting to 365 days or more.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A company is resident in
India if it is registered in India or the control and management of its affairs is situated wholly in India. A firm or other association of persons is resident in India except where the control and management of its affairs is situated
wholly outside India. Individuals, companies, firms and other associations of persons that are not residents of India would be treated as non-residents for purposes of the Indian Tax Act.

Taxation of Distributions

Dividends paid to shareholders (whether or not resident in India) will not be subject to tax in the hands of the shareholders. However a company paying
the dividend is subject to a dividend distribution tax of 16.60875 % (including surcharge and education cess) on the total amount it pays to its shareholders as dividends, in addition to the normal corporate tax on its income.

Taxation of Rights

Any distribution of additional ADSs, Shares or rights to subscribe for Shares made to non-residents with respect to ADSs or Shares will not be subject to
Indian tax.

Taxation on Surrender of ADSs

The acquisition by a non-resident holder of Shares upon surrender of ADSs does not constitute a taxable event for Indian income tax purposes. Such
acquisition will, however, give rise to a stamp duty as described below under Stamp Duty and Transfer Tax.

Taxation of Capital Gains

Any transfer of ADSs outside India by a non-resident investor to another non-resident investor does not give rise to Indian capital gains tax. It is
unclear whether capital gains derived from the sale of rights by a non-resident investor to another non-resident investor will be subject to capital gains tax. If the rights are deemed to be situated within India, the gain realised on the sale of
rights will be subject to Indian taxation.

A gain ordinarily arising on the sale of an equity share, whether to a resident or a non-resident
or whether inside India or outside India, will give rise to a liability for Indian capital gains tax. However, any gain arising on the sale of an equity share of a company held for more than 12 months (measured from the date of advice of redemption
of the ADS by the depositary)which is a long-term capital gain, will be exempt from tax if the sale is registered on a recognized Stock Exchange and such transaction of sale is chargeable to Securities Transaction Tax (STT). In other cases
of long-term capital gains, the rate of tax will be as applicable as given in the table below.

Where the equity share has been held for 12
months or less, the rate of tax varies and will depend on a number of factors, including without limitation the status of the non-resident investor and will be as applicable for short-term capital gains (ST) as given in the table below.
However, in such a case, there is also a concessional rate of tax available, if the sale is entered on a recognized stock exchange and such transaction of sale would apply to the Securities Transaction Tax (STT) as described below under
Securities Transaction Tax.

The table below gives the capital gains tax rates including surcharge and education cess applicable
to Corporate and non-corporate under the different scenarios.



|                |  |                                          |  |                    |  |           |  |         |            |  |      
|--------------- |  | ---------------------------------------- |  | ------------------ |  | --------- |  | ------- | ---------- |  | -----
|INVESTOR        |  | INCOME                                   |  | CAPITAL GAINS     
|                |  | Subject to STT                           |  | Not Subject to STT
|                |  | Long Term                                |  | Short Term         |  | Long Term |  |         | Short Term
|                |  | %                                        |  | %                  |  | %         |  |         | %         
|FOREIGN COMPANY |  | Exceeds Rs. 10,000,000                   |  | NIL                |  | 15.8363   |  | 10.5575 |            |  | 42.23
|                |  | Equals or does not exceed Rs. 10,000,000 |  | NIL                |  | 15.45     |  | 10.30   |            |  | 41.20
|NON-CORPORATE   |  |                                          |  | NIL                |  | 15.45     |  | 20.60   | *          |  | 30.90



|* | with indexation benefit, whereas without indexation benefit the rate applicable would be 10.30%
|- | -----------------------------------------------------------------------------------------------



86



---

##### Table of Contents

On a transfer of shares from the depositary upon the redemption of ADSs, the provisions of the double
taxation treaty entered into by the GoI with the country of residence of the non-resident investors will be applicable in the matter of taxation of any capital gain arising on such transfer. The double taxation treaty between the United States and
India does not provide U.S. residents with any relief from Indian tax on capital gains.

For purposes of determining the amount of capital
gains arising on a sale of an equity share for Indian tax purposes, the cost of acquisition of an equity share received upon redemption of an ADS will be the price of the share prevailing on the Bombay Stock Exchange or the National Stock Exchange
on the date on which the depositary advises the custodian of such redemption and not the acquisition cost of the ADS being redeemed. The holding period of an equity share received upon redemption of an ADS will commence from the date of advice of
redemption by the depositary.

The Finance Act, 2008 has inserted section 49(2A) to provide that the cost of acquisition of an equity share
received upon redemption of an ADS shall be deemed to be that part of cost of the ADS in relation to which the equity share is acquired. With the insertion of section 49(2A), presently there is no clarity on what should be the cost of the
acquisition of Shares which is to be considered in computing the capital gains on the sale of such shares.

Exemption of
Capital Gains

As explained above, any gain arising on the sale of an equity share of a company held for more than 12 months will be
exempt from tax if the sale is entered into on a recognized stock exchange and such transaction of sale is chargeable to STT.

Tax Deduction at Source

There is no withholding tax on long-term capital gains where such gains are exempt under the Act. Tax on other long-term and short-term capital gains is
deducted at the source by the payer.

Capital Losses

Long-term capital loss on the sale of Shares being chargeable to STT will not be allowed to be set-off or carried forward for set-off against any capital
gains.

For other cases, in general terms, losses arising from a transfer of a capital asset in India can only be set-off against capital
gains. A long-term capital loss can be set off only against a long-term capital gain. To the extent that losses are not absorbed in the year of transfer, they may be carried forward for a period of eight assessment years immediately succeeding the
assessment year and may be set-off against the capital gains assessable for such subsequent assessment years. In order to set-off capital losses as above, the non-resident investor would be required to file appropriate and timely tax returns in
India.

Securities Transaction Tax

As per Chapter VII of the Finance (No. 2 Act), 2004 (as amended), STT is payable as follows:



|        |  |                                                                                                                                                                                                                             |  |       |   |  |           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | - |  | ----------
|Sr. No. |  | Taxable Securities Transaction                                                                                                                                                                                              |  | Rate  |   |  | Payable by
|1.      |  | Purchase of an equity share in a company, where -
 (a) the purchase is on a recognized
stock exchange; and  (b) the
contract for the purchase of such share is settled by the actual delivery or transfer of such share.    |  | 0.125 | % |  | Purchaser 
|        |  |                                                                                                                                                                                                                             | 
|2.      |  | Sale of an equity share in a company, where -
 (a) the sale is on a recognized stock
exchange; and  (b) the
contract for the sale of such share is settled by the actual delivery or transfer of such share.                |  | 0.125 | % |  | Seller    
|        |  |                                                                                                                                                                                                                             | 
|3.      |  | Sale of an equity share in a company, where -
 (a) the sale is on a recognized stock
exchange; and  (b) the
contract for the sale of such share is settled otherwise than by the actual delivery or transfer of such share. |  | 0.025 | % |  | Seller    

The recognized stock exchange is
responsible for collecting the STT and paying it into the Government treasury.



87



---

##### Table of Contents

Stamp Duty and Transfer Tax

Upon the issuance of Shares, the Company is required to pay a stamp duty of 0.1% per share of the issue price of the underlying Shares. A transfer of
ADSs is not subject to the Indian stamp duty. However, upon the acquisition of Shares from the Depositary in exchange for ADSs, the holder will be liable for Indian stamp duty at the rate of 0.25% of the market value of the ADSs or Shares exchanged.
A sale of Shares by a registered holder will also be subject to Indian stamp duty at the rate of 0.25% of the market value of the Shares on the trade date or the consideration amount, whichever is higher, although customarily such tax is borne by
the transferee. However, in the case of Shares held with the Depositary in electronic mode, there will not be any incidence of stamp duty.

Wealth Tax

ADSs
held by non-resident holders and the underlying Shares held by the depositary and the transfer of ADSs between non-resident holders and the depositary will be exempt from Indian wealth tax.

Estate Duty

Under current Indian law, there is no estate duty applicable to a non-resident holder of ADSs or Shares.

Service Tax

Brokerage fees or commissions paid to stock brokers in connection with the sale or purchase of shares is subject to a service tax of 10.30%. The stock
broker is responsible for collecting the service tax and paying it into the Government Treasury.

United States Federal
Taxation

The following summary describes the material United States federal income and estate tax consequences of the ownership and
disposition of Shares and ADSs as of the date hereof. The discussion set forth below is applicable to US Holders (as defined below). Except where noted, it deals only with Shares and ADSs held as capital assets and does not deal with special
situations, such as those of dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, financial institutions, tax-exempt entities, life insurance companies,
persons holding Shares or ADSs as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, corporations that accumulate earnings to avoid U.S. federal income tax, persons owning 10% or more of the voting stock of the
Company, persons subject to the alternative minimum tax or persons whose functional currency is not the United States dollar. Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended
(the Code), and regulations, rulings and judicial decisions there under as of the date hereof, and such authorities may be repealed, revoked or modified, in each case, possibly with retroactive effect so as to result in United States
federal income tax consequences different from those discussed below. In addition, this summary is based, in part, upon representations made by the Depositary to the Company and assumes that the Deposit Agreement, and all other related agreements,
will be performed in accordance with their terms. Persons considering the purchase, ownership or disposition of Shares or ADSs should consult their own tax advisors concerning the United States federal income tax consequences in light of their
particular situations as well as any consequences arising under foreign, state or local tax laws.

As used herein, the term US
Holder means a beneficial holder of a Share or ADS that is, for United States federal income tax purposes (1) an individual who is a citizen or resident of the United States, (2) a corporation, or entity taxable as a corporation,
created or organized in or under the laws of the United States or any political subdivision thereof, (3) an estate the income of which is subject to United States federal income taxation regardless of its source or (4) a trust
(X) which is subject to the supervision of a court within the United States and is under the control of one or more United States persons as described in section 7701(a)(30) of the Code or (Y) that has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a United States person.



88



---

##### Table of Contents

If a partnership holds the Shares or ADSs, the tax treatment of a partner will generally depend upon the
status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Shares or ADSs, you should consult your tax advisor.

Ownership of ADSs

In general, for United States federal income tax purposes, U.S. Holders of ADSs will be treated as the owners of the underlying Shares that are
represented by such ADSs. Deposits or withdrawal of Shares by US Holders for ADSs will not be subject to United States federal income tax. However, the United States Treasury has expressed concerns that parties to whom depositary Shares are
pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits by the holders of ADSs. Accordingly, the analysis of the creditability of Indian taxes paid with respect to the ADSs could be affected by future
actions that may be taken by the United States Treasury.

Taxation of Dividends

To the extent that distributions paid by the Company with respect to its Shares or ADSs do not exceed its earnings and profits, as calculated for United
States federal income tax purposes, such distributions will be taxed as dividends. If these dividends constitute qualified dividend income (QDI), individual U.S. holders of the Companys Shares or ADSs will generally pay tax on such
dividends received during taxable years before 2011 at a maximum rate of 15%, provided that certain holding period requirements are satisfied. Assuming the Company is not a passive foreign investment company (as discussed below) or a foreign
investment company, dividends paid will be QDI if the Company is a qualified foreign corporation (QFC) at the time the dividends are paid. The Company believes that it is currently, and will continue to be, a QFC so as to allow all
dividends paid by to be QDI for United States federal income tax purposes. Corporate holders receiving dividends paid by the Company will not benefit from the reduced tax rate on dividends available to individual holders. In addition, dividends paid
by the Company will not be eligible for the dividends-received deduction allowed to corporations under the Code.

The amount of any dividend
paid in Indian Rupees will equal the US dollar value of the Indian Rupees received calculated by reference to the exchange rate in effect on the date the dividend is received by the US Holder, in the case of Shares, or by the Depositary, in the case
of ADSs, regardless of whether the Indian Rupees are converted into US Dollars. It is expected that the Depository will, in the ordinary course, convert the Indian Rupees received by it as distributions in the Depositary into US Dollars. If the
Indian Rupees received as a dividend are not converted into U. S. dollars on the date of receipt, a US Holder will have a basis in the Indian Rupees equal to their U. S. dollar value on the date of receipt. Any gain or loss realized on a subsequent
conversion or other disposition of the Indian Rupees will be treated as ordinary income or loss that is United States source.

Dividends paid
on the Shares or ADSs will be treated as income from sources outside the United States and will generally constitute passive income. Subject to certain limitations, a US Holder may be entitled to a credit or deduction against its United
States federal income taxes for the amount of any Indian taxes that are withheld from dividend distributions made to such US Holder. The decision to claim either a credit or deduction must be made annually, and will apply to all foreign taxes paid
by the US Holder to any foreign country or United States possession with respect to the applicable tax year. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules regarding
the availability of foreign tax credits are complex and US Holders may be subject to various limitations on the amount of foreign tax credits that are available. US Holders are urged to consult their own tax advisors regarding the availability of
the foreign tax credit under their particular circumstances.

To the extent that the amount of any distribution by the Company exceeds the
Companys current and accumulated earnings and profits as determined under United States federal income tax principles for a taxable year, the distribution will first be treated as a tax-free return of capital, causing a reduction in the
adjusted basis of the Shares or ADSs (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the US Holder on a subsequent disposition of the Shares or ADSs), and the balance in excess of the adjusted basis will
be taxed as a capital gain recognized on a sale or exchange. Consequently, such distributions in excess of the Companys current and accumulated earnings and profits would not give rise to foreign source income.

Distributions of Shares or rights to subscribe for Shares that are received as part of a pro rata distribution to all shareholders of the Company in
certain circumstances should not be subject to United States federal income tax. The basis of the new Shares or rights so received will be determined by allocating the US Holders basis in the old Shares between the old Shares and the new
Shares or rights received, based on their relative fair market values on the date of distribution. However, the basis of the rights will be zero if (1) the fair market value of the rights is less than 15% of the fair market value of the old
Shares at the time of distribution or (2) the rights are not exercised and thus expire.



89



---

##### Table of Contents

Taxation of Capital Gains

For United States federal income tax purposes, a US Holder will recognize taxable gain or loss on the sale or exchange of a right, Share or ADS in an
amount equal to the difference between the amount realized for the right, Share or ADS and the US Holders tax basis in the right, Share or ADS. Such gain or loss will be a capital gain or loss and it will be a long-term capital gain or loss if
the holding period of the US Holder exceeds one year. Current law generally provides that long-term capital gains realized by individuals are subject to federal income tax at a maximum rate of 15% for taxable years beginning before January 1,
2011. Any gain or loss recognized by a US Holder will generally be treated as United States source gain or loss. Certain limitations exist on the deductibility of capital losses for both corporate and individual taxpayers.

Under certain circumstances described under Indian TaxationTaxation of Capital Gains in this report, a US Holder may be subject to
Indian tax upon the disposition of rights, Shares or ADSs. In such circumstances and subject to applicable limitations, such US Holder may elect to treat the gain as foreign source income and to credit the Indian tax against its United States
federal income tax liability with respect to the gain. US Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

For cash-basis US Holders who receive foreign currency in connection with a sale or other taxable disposition of rights, Shares or ADSs, the amount
realized will be based upon the United States dollar value of the foreign currency received with respect to such rights, Shares or ADSs as determined on the settlement date of such sale or other taxable disposition.

Accrual-basis US Holders may elect the same treatment required of cash-basis taxpayers with respect to a sale or other taxable disposition of rights,
Shares or ADSs, provided that the election is applied consistently from year to year. Such election cannot be changed without the consent of the IRS. Accrual-basis US Holders that do not elect to be treated as cash-basis taxpayers (pursuant to the
Treasury Regulations applicable to foreign currency transactions) for this purpose may have a foreign currency gain or loss for United States federal income tax purposes because of differences between the United States dollar value of the foreign
currency received prevailing on the date of such sale or other taxable disposition and the value prevailing on the date of payment. Any such currency gain or loss will generally be treated as ordinary income or loss that is United States source, in
addition to the gain or loss, if any, recognized on the sale or other taxable disposition of rights, Shares or ADSs.

Estate Taxation

An individual shareholder who is a citizen or resident of the United States for United States federal estate tax purposes will have the value of the
Shares or ADSs owned by such holder included in his or her gross estate for United States federal estate tax purposes.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to dividends in respect of the Shares or ADSs or the proceeds received on the sale, exchange, or
redemption of the Shares or ADSs paid within the United States (and in certain cases, outside of the United States) to US Holders other than certain exempt recipients (such as corporations), and a 28% backup withholding rate may apply to such
amounts if the US Holder fails to provide an accurate taxpayer identification number to the Company or its payment agent or to report interest and dividends required to be shown on its United States federal income tax returns. The amount of any
backup withholding from a payment to a US Holder will generally be allowed as a credit against the US Holders United States federal income tax liability, provided that the required information is furnished to the IRS.

Passive Foreign Investment Company

A non-U.S. corporation will be classified as a passive foreign investment company for U.S. Federal income tax purposes if either:



| |  |  | 75% or more of its gross income for the taxable year is passive income; or
| | - |  | --------------------------------------------------------------------------



| |  |  | on average for the taxable year by value, or, if it is not a publicly traded corporation and so elects, by adjusted basis, if 50% or more of its assets
produce or are held for the production of passive income.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company does not believe that it satisfies either of the
tests for passive foreign investment company status for fiscal 2009. The Company will be required to determine its status as a passive foreign investment company on an annual basis. No assurance can be given that the Company will not be considered a
passive foreign investment company in future taxable years. If the Company were to be a passive foreign investment company for any taxable year, U.S. holders would be required to either:



| |  |  | pay an interest charge together with tax calculated at ordinary income rates on excess distributions, as the term is defined in relevant
provisions of the U.S. tax laws and on any gain on a sale or other disposition of Shares;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if a qualified electing fund election (as the term is defined in relevant provisions of the U.S. tax laws) is made, include in their
taxable income their pro rata share of undistributed amounts of the Companys income; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



90



---

##### Table of Contents

| |  |  | if the Shares are marketable and a mark-to-market election is made, mark-to-market the Shares each taxable year and recognize ordinary gain
and, to the extent of prior ordinary gain, ordinary loss for the increase or decrease in market value for such taxable year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If the Company is treated as a passive foreign investment company, the Company does not plan to provide information necessary for the qualified
electing fund election.

Documents on Display

This report and other information filed or to be filed by the Company can be inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at:

100 F Street, N.E.,

Washington, D.C. 20549

Copies of these
materials can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. The public may obtain information on the operation of the SECs Public Reference Room by calling the
SEC in the United States at 1-800-SEC-0330.

The SEC maintains a website atwww.sec.gov that contains reports, proxy and information
statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. We intend to continue to make our future SEC filings available over the Internet.

Additionally, documents referred to in this Form 20-F may be inspected at our registered office which is located at VSB, Mahatma Gandhi Road, Mumbai
400001, India. Information about Tata Communications is also available on the web atwww.tatacommunications.com but the Website and its content is not incorporated into and should not constitute a part of this annual report.



|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

The Company does not face material commodity price or equity price market risks. Our exposures to financial risks derive primarily from changes in
interest rates and foreign exchange rates. To mitigate these risks, we utilize derivative financial instruments, including interest rate swaps and currency forwards and options, the application of which is primarily for hedging purposes and not for
speculative purposes.

Interest Rate Risk

Our exposure to interest rate risks relates primarily to:



| |  | Our long term debt, which is normally utilized to finance capital expenditures and acquisitions, and
|- |  | ----------------------------------------------------------------------------------------------------



| |  | Our investment in debt based mutual funds (available-for-sale securities).
|- |  | --------------------------------------------------------------------------

We are subject to market risk from exposure to changes in interest rates based on our investing and cash management activities. We enter into financial
instrument transactions to maintain the desired level of exposure to the risk of interest rate fluctuations and to minimize interest expense. We have entered into Over the Counter (OTC) interest rate swaps, a derivative financial instrument, to
reduce the interest rate risk related to these activities. We entered into an interest rate swap of Rs. 4,951 million (US$ 110 million) and forward starting interest rate swaps of Rs. 6,751million (US$ 150 million) effective from fiscal year
2011 onwards out of total floating rate debt of Rs. 34,580 million (US$ 769 million).

The interest rate swap is designated as a cash
flow hedge and the effective portion of the changes in fair value of the swaps are deferred in accumulated other comprehensive income/(loss) and are recognized as interest expense when the hedged item affects earnings. The impact to earnings
associated with hedge ineffectiveness is recorded in interest expense. During fiscals 2008, 2009 and 2010 there was no material ineffectiveness related to the change in the fair value of the swaps. Based on the terms of the derivative instruments
designated as cash flow hedges, Rs. 189 million (US$ 4.2 million) of unrealized losses currently in accumulated other comprehensive income/(loss) is estimated to be transferred into earnings during fiscal 2011.

A 1% change in the interest rates on our unhedged floating rate long-term loans as on March 31, 2010 would have had an aggregate adverse or
beneficial impact of Rs. 249 million (US$ 5.53 million) on our financial statements for fiscal year 2011.



91



---

##### Table of Contents

All long-term debts which had a fixed interest rate for at least one year as at the end March 31, 2010
have been considered fixed rate debt. Total outstanding long-term debt as at March 31, 2010 is Rs. 55,509 million (US$ 1,235 million). As of March 31, 2010, approximately 53% of the total long-term debt carried floating interest rates. We
had entered into forward start swaps in fiscal 2010, effective from fiscal year 2011 thereby reducing the exposure to variable interest rate loans to around 41%. Available-for-sale securities (debt mutual funds) are carried at their fair values,
which are generally based on market price quotations. As at March 31, 2010, the fair value of mutual fund investments is Rs. 4,523 million (US$ 100.62 million) against the book value of Rs. 4,519 million (US$ 100.53
million).

Foreign Exchange Risk

The Company is exposed to market risk from changes in foreign currency exchange rates because its costs and revenues are denominated in several currencies
(primarily INR, US$, EUR, CAD and GBP). Fluctuations in the exchange rates between these currencies affect the Indian Rupee and US Dollars (for international subsidiaries of Tata Communications) amount of foreign currency settlements received by the
Company from, and paid by the Company to, foreign telecommunication administrations, other customers, the revenues and operating costs of the Company and payments for imported equipment and technology. As of March 31, 2010, the Company had
a significant amount of foreign currency denominated receivables (Rs. 10,949 million or US$ 244 million) and payables (Rs. 13,313 million or US$ 296 million), which expose the Company to foreign exchange risks. A 1% strengthening
or weakening of the Rupee against foreign currencies would have had an aggregate beneficial or adverse impact of Rs. 23.64 million (US$ 0.52 million) on the Companys financial statements.

We also have external foreign currency debt exposure on our books of Rs. 3,464.47 million (US$ 77 million). This includes long-term borrowings of
Rs. 2,575 million (US$ 57 million) and Rs. 890 million (US$ 20 million) of short- term borrowings. A 1% strengthening or weakening of the rupee against the foreign currency short-term debt would have had an aggregate adverse or beneficial
impact of Rs. 8.90 million (US$ 0.20 million) on our financial statements.

The Company uses foreign currency forward and option
contracts (derivative instruments) to manage the exchange risks associated with movements in foreign currencies against functional currencies of the Company.

As at March 31, 2010, the derivative instruments had a net fair value of Rs. 347 million, out of which Rs. 351 million of fair value was
recognised as an asset and Rs. 4 million was recognised as a liability.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------

Fees and charges payable by holders of our ADSs

The fees and charges payable by holders of our ADSs include the following:



|(i) | a fee not in excess of US $5 per 100 ADS for the execution and delivery of receipts and the surrender of receipts;
|--- | ------------------------------------------------------------------------------------------------------------------



|(ii) | a fee not in excess of US $0.02 per ADS for each cash distribution pursuant to the deposit agreement; and
|---- | ---------------------------------------------------------------------------------------------------------



|(iii) | a fee for the distribution of the deposited securities pursuant to the deposit agreement, such fee being an amount equal to the fee for the execution and delivery of
ADSs referred to in (i) above which would have been charged as a result of the deposit of such securities, but which securities were instead distributed by the depositary to ADR holders.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additionally, under the terms of our deposit agreement, the depositary is entitled to charge each registered holder the following:



|(i) | taxes and other governmental charges incurred by the depositary or the custodian on any ADS or an equity share underlying an ADS;
|--- | ---------------------------------------------------------------------------------------------------------------------------------



|(ii) | transfer or registration fees for the registration or transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of
deposited securities, including those of a central depository for securities (where applicable);
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | any cable, telex, facsimile transmission and delivery expenses incurred by the depositary; and
|----- | ----------------------------------------------------------------------------------------------



|(iv) | customary expenses incurred by the depositary in the conversion of foreign currency, including, without limitation, expenses incurred on behalf of registered holders in
connection with compliance with foreign exchange control restrictions and other applicable regulatory requirements.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



92



---

##### Table of Contents

In the case of cash distributions, fees are generally deducted from the cash being distributed. Other
fees may be collected from holders of ADSs in a manner determined by the depositary with respect to ADSs registered in the name of investors (whether certificated or in book-entry form) and ADSs held in brokerage and custodian accounts (via DTC). In
the case of distributions other than cash (i.e., stock dividends, etc.), the depositary charges the applicable ADS record date holder concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated
or in book-entry form), the depositary sends invoices to the applicable record date ADS holders.

If any tax or other governmental charge is
payable by the holders and/or beneficial owners of ADSs to the depositary, the depositary, the custodian or the Company may withhold or deduct from any distributions made in respect of deposited securities and may sell for the account of the holder
and/or beneficial owner any or all of the deposited securities and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges, with the holder and the beneficial owner thereof
remaining fully liable for any deficiency.

Fees and other payments made by the depositary

During fiscal 2010, the Depositary paid approximately US $38,000 to the NYSE on behalf of the Company for its annual stock exchange listing fees. The
Company has not received any other reimbursements or payments from the depository directly or indirectly during fiscal 2010.

PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

None



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

None



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Based on their
evaluation as of March 31, 2010, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures, as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms and that material information related to us and our consolidated subsidiaries is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions about required disclosures.

Changes in Internal Control over Financial Reporting

During the period covered by this Annual Report, we have strengthened our internal controls over process of reviews for correct classification of income
tax balances relating to uncertain tax positions. Further there were no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial
reporting.

Managements Report on Internal Control over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal controls over financial reporting. Internal controls over
financial reporting is a process designed by, or under the supervision of, the Companys principal executive and principal financial officers or persons performing similar functions and effected by the Companys board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America.

The Companys internal controls over financial reporting includes those policies and procedures that:



| |  |  | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



93



---

##### Table of Contents

| |  |  | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that
could have a material effect on our financial statements.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due to inherent limitations, including the possibility of human
errors, the circumventing or overriding of controls, or fraud, internal controls over financial reporting may not prevent or detect misstatements. Therefore, even effective internal controls can provide only reasonable assurance with respect to the
preparation and fair presentation of financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management is not required to evaluate the internal controls of entities
accounted for under the equity method. Accordingly, the internal controls of these entities, which contributed a net loss of Rs. 3,192 million to the net loss for the year, have not been assessed, except relating to controls over the recording and
related disclosure of amounts relating to the investments that are recorded in the Companys consolidated financial statements.

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that the Companys internal controls over financial reporting
were effective as of March 31, 2010.

Our Independent registered public accounting firm, Deloitte Haskins & Sells has audited
the consolidated financial statements in this annual report on Form 20-F, and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting as of March 31, 2010.



|ITEM 16. | [RESERVED]
|-------- | ----------

Not applicable



|ITEM 16 A. | AUDIT COMMITTEE FINANCIAL EXPERT
|---------- | --------------------------------

Mr. Amal Ganguli, one of the Companys independent directors, joined the Board on July 17, 2006 and was nominated as a member and elected
Chairman of the audit committee on October 19, 2006. The Board has determined that Mr. Amal Ganguli is a financial expert. Mr. Gangulis relevant experience is described under Item 6Directors and Senior
Management.



|ITEM 16 B. | CODE OF ETHICS
|---------- | --------------

The Company has adopted
the Tata Code of Conduct, which is applicable to all employees of the Company including the executive directors, the Chief Executive Officer, the Chief Financial Officer and all other key executive officers of the Company.

The Company undertakes to provide a copy of the Code of Conduct to any person without charge who requests it in writing to Tata Communications Limited,
Office of Company Secretary and Chief Legal Officer, 4th Floor, Tower C, Plot nos C21 & C36, G Block, BKC, Mumbai-400098, India.



|ITEM 16 C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|---------- | --------------------------------------

The following table sets forth for the fiscal years indicated the fees paid to our principal accountant and its associated entities for various services
they provided to us in fiscal 2009 and 2010:



|                      |  |                            |  |                |  |                                                                              
|--------------------- |  | -------------------------- |  | -------------- |  | -----------------------------------------------------------------------------
|                      |  | Fiscal Year ended March 31 |  |               
|Type of Service       |  | 2009                       |  | 2010           |  | Description of Service                                                       
|a) Audit Fees         |  | Rs. 93,856,334             |  | Rs. 74,173,103 |  | Annual audit of financial statements under U.S. GAAP and Indian GAAP.        
|                      |  |                            | 
|b) Audit-Related Fees |  | Rs. 16,517,200             |  | Rs. 15,117,200 |  | Services related to the quarterly review of financial statements.            
|                      |  |                            | 
|c) Tax Fees           |  | Rs. 73,458,982             |  | Rs. 52,172,177 |  | Tax audit fees and tax consulting services.                                  
|                      |  |                            | 
|d) All Other Fees     |  | Rs. 43,135,802             |  | Rs. 10,407,095 |  | Statutory and regulatory attestations and fees for acquisition due diligence.



94



---

##### Table of Contents

The above professional services are covered within the scope of audit and permitted non-audit services as
defined by SEC regulations. All fees disclosed for the fiscal years ended March 31, 2009 and 2010, including the fees for tax services set forth above, have been approved by the Companys audit committee subject to the policy and
procedures described below. The appointment of and services provided by our principal accountant for our subsidiaries were ratified by the Audit Committee of the Company.

Audit Committee Pre-Approval Policy and Procedures

Policy

Our audit committee
pre-approves the following professional services provided to the Company and its subsidiaries by its external auditors:



|(1) | All audit services; and
|--- | -----------------------



|(2) | All non-audit services, including tax services.
|--- | -----------------------------------------------

Procedures

Our audit committee:

1. Reviews and approves, prior to the engagement of the external auditors, on an annual basis the specific financial/statutory audits for the
fiscal year to be rendered by the external auditors.

2. Approves specific categories of audit-related services annually up to a fee limit.
Specific approval of the audit committee is required to exceed the pre-approved fee limit. All other audit-related services to be performed by the external auditors that are incremental to the annual pre-approved services list must be specifically
approved by the audit committee prior to the engagement for the service.

3. Pre-approves annually permitted tax services to be rendered by
the external auditors up to a fee limit. Specific approval of the audit committee is required to exceed the pre-approved fee limit. All other tax services to be performed by the external auditors that are incremental to the annual pre-approved
services list must be specifically approved by the audit committee prior to the engagement for the service.

4. Pre-approves any other
non-audit service by the external auditors not prohibited by Company policy or SEC regulations on a case by case basis.

The Audit Committee
may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by the policy and procedures. The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service
shall be presented to the full Audit Committee at its next scheduled meeting.



|ITEM 16 D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|---------- | ----------------------------------------------------------

The Companys audit committee is composed of four directors, all of whom meet the independence requirements under Rule 10A-3 of the Exchange Act with
the exception of Mr. Md. Shahbaz Ali who is exempt from such requirements pursuant to Rule 10A-3(b)(1)(iv)(E) of the Exchange Act as he is a representative of the Government of India and is not an executive officer of the Company. The
Companys reliance on such exemption does not materially adversely affect the ability of our audit committee to act independently.



|ITEM 16 E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|---------- | ----------------------------------------------------------------------

None



|ITEM 16 F. | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
|---------- | --------------------------------------------

None



|ITEM 16 G. | CORPORATE GOVERNANCE
|---------- | --------------------

We are incorporated
under the Indian Companies Act, 1956 and our Shares are listed on the major stock exchanges in India. Our corporate governance framework is in compliance with the Indian Companies Act, 1956, the regulations and guidelines of the Securities and
Exchange Board of India and the requirements of the listing agreements entered into with the Indian stock exchanges. We also have American Depositary Shares listed on the New York Stock Exchange.



95



---

##### Table of Contents

Section 303A.11 of the NYSE Corporate Governance Standards requires listed companies that are foreign
private issuers to disclose the significant ways in which their corporate governance practices differ from those followed by U.S. companies under the NYSE Corporate Governance Standards. The table below sets forth the differences between the rules
applicable to U.S. companies under the NYSE Corporate Governance Standards and the Companys practice under Indian law.



|                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE rule applicable to U.S. listed companies                                                                                                 |  | Indian law and the Companys practice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                              | 
|Companies must have a majority of independent directors. (NYSE Corporate Governance Standard 303A.01)                                         |  | Under Indian law, if the chairman of a board of directors is a non-executive director, at least one-third of the board must be comprised of independent directors and if he is an
executive director, at least half of the board must be comprised of independent directors. However, if the non-executive chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level
or at one level below the board, at least one-half of the board of the company must be independent directors. The chairman of our Board is not an executive of the Company nor is he a promoter of the Company or related to any promoter or person
occupying management positions at the Board level or at one level below the Board and four out of twelve members of our Board are independent, which satisfies the requirement under Indian law.                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                              | 
|Certain heightened standards apply to independent directors. (NYSE Corporate Governance Standard 303A.02)                                   |  | Under Indian law, a director is independent so long as he or she
 a. apart from receiving directors remuneration, does not have any material
pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries or associates which may affect independence of the director;
 b. is not related to promoters or persons occupying management positions at the board
level or at one level below the board;  c. has not been an executive of the
Company in the immediately preceding three financial years;  d. is not a
partner or an executive or was not partner or an executive during the preceding three years, of any of the following: 
i.       the statutory audit firm or the internal audit firm that is
associated with the Company, or 
ii.      the legal firm(s) and consulting firm(s) that have a material association
with the Company;  e. is not a material supplier, service provider or
customer or a lessor or lessee of the Company, which may affect independence of the director; 
f. is not a substantial shareholder of the Company, i.e. owning two percent or more of its voting shares;
 g. is not less than 21 years of age.
|                                                                                                                                              | 
|                                                                                                                                              |  | The Company applies this definition in its corporate
governance practices and the Companys four independent
directors satisfy the requirements of the definition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                              | 
|Non-management directors must meet at regularly scheduled executive sessions without management. (NYSE Corporate Governance Standard 303A.03) |  | Under Indian law, there is no such requirement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



96



---

##### Table of Contents

|                                                                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE rule applicable to U.S. listed companies                                                                                                                                                                                                                                                           |  | Indian law and the Companys practice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                        | 
|Companies must have a nominating/corporate governance committee composed entirely of independent directors. (NYSE Corporate Governance Standard 303A.04)                                                                                                                                                |  | Under Indian law, a nominating/corporate governance committee is not required. The Company does not have such a committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                        | 
|The nominating/corporate governance committee must have a written charter that addresses certain specific committee purposes and responsibilities and provides for an annual
performance evaluation of the committee. (NYSE Corporate Governance Standard 303A.04)                                      |  | Since Indian law does not require a nominating/corporate governance committee, it also does not require a charter for such a committee. The Company does not have such a charter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                        | 
|Companies must have a compensation committee composed entirely of independent directors. (NYSE Corporate Governance Standard 303A.05)                                                                                                                                                                   |  | Under Indian law, a companys board of directors sets the compensation for non-executive directors. Non-mandatory Indian law recommends that companies establish a remuneration
committee composed of non-executive directors and an independent chairman to determine the compensation of executive directors. The Company has such a committee composed of one non-executive director, one independent director and one government
nominee director.                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                        | 
|The compensation committee must have a written charter that addresses certain specific purposes and responsibilities of the committee and provides for an annual performance
evaluation of the committee. (NYSE Corporate Governance Standard 303A.05)                                                  |  | Indian law does not require that the compensation committee have a charter. The scope of the Companys remuneration committee includes determination of the Boards
compensation and the Companys policy on specific remuneration packages for executive directors including pension rights and any other compensation payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                        | 
|Companies must have an audit committee that satisfies the independence requirements of Rule 10A-3 under the Exchange Act and the requirements of NYSE Corporate Governance Standard
303A.02. (NYSE Corporate Governance Standards 303A.06 and 303A.07)                                                  |  | An audit committee is required under Indian law. The Company has an audit committee composed of four non-executive directors, out of which three are independent, including the
committees chairman, and one of whom is a government representative and falls within an exemption to the independence requirement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                        | 
|The audit committee must have a written charter that addresses certain specific purposes and responsibilities of the committee, provides for an annual performance evaluation of the
committee and sets forth certain minimum duties and responsibilities. (NYSE Corporate Governance Standard 303A.07) |  | The Company has a written audit committee charter that provides for specific purposes and responsibilities as set forth in the Companys listing agreement with the Indian stock
exchanges and SOX compliance requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                        | 
|Companies must adopt and disclose corporate governance guidelines. (NYSE Corporate Governance Standard 303A.09)                                                                                                                                                                                         |  | Indian law does not require the adoption and disclosure of corporate governance guidelines. However, information with respect to
corporate governance can be found in our annual report for 2009-10 (Page 26 to Page 40) under the headings: 
       Report on corporate governance for the year 2009-10

       Directors Responsibility Statement for the Year 2009-10 
       Secretary Responsibility Statement

       Declaration regarding compliance by Board Members and Senior
Management Personnel with Companys Code of Conduct. 
       Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certification for the Year 2009-10. 
       Auditors certificate on compliance with the conditions of
corporate governance under Clause 49 of the Listing Agreements



97



---

##### Table of Contents

|                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE rule applicable to U.S. listed companies                                                                                                                                                                                                  |  | Indian law and the Companys practice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or
executive officers. (NYSE Corporate Governance Standard 303A.10) |  | As required by the regulations framed by the Securities and Exchange Board of India regulations, the Company has adopted a code governing trading in the Companys securities
by insiders. As required under the listing agreement with Indian stock exchanges, the Company has also adopted a Code of Conduct for Senior Management and Board Members. The Board members and our senior management have affirmed the Code of Conduct.
The Code of Conduct is available on the Companys website www.tatacommunications.com, but none of the information on the Companys website is incorporated into this document and it should not be considered a part of this document.

Section 303.A.12 (c) of the NYSE Corporate Governance Standards states that each listed company must submit an
executed Written Affirmation annually to the NYSE. The Company submitted its Foreign Private Issuer Section 303A Annual Written Affirmation in November 2009. Section 303A of the NYSE Corporate Governance Standards states that each listed
company must submit an executed Interim Written Affirmation to the NYSE in case there is a change in the composition of the Audit Committee of the Company. Accordingly, an Interim Written Affirmation under Section 303A of Tata Communications
Limited was filed on 6 April 2010 and 24 September 2010 which were necessitated by the exit of Mr. H.P. Mishra and Mr. Manish Sinha respectively from the Audit Committee and the appointment of Mr. Md. Shahbaz Ali as a new member
of the Audit Committee.

PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

The Company has
elected to provide financial statements pursuant to Item 18 of Form 20-F.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

The following
financial statements comprised the consolidated balance sheets of the Company as of March 31, 2009 and 2010 and the related consolidated statements of operations, changes in shareholders equity and cash flows for the fiscal years ended
March 31, 2008, 2009 and 2010 prepared in accordance with U.S. GAAP, which have been audited by Deloitte Haskins & Sells, an independent registered public accounting firm, in accordance with Standards of the Public Company Accounting
Oversight Board (United States) (PCAOB). The financial statement pages appear on pages F-1 through F-55.



98



---

##### Table of Contents

|ITEM 19. | EXHIBITS
|-------- | --------



|              |  |                                                                                                                                                                                                                                                                   
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                       
|              | 
|1.1*          |  | Certificate of Incorporation of Tata Communications Limited, dated March 19, 1986 and as currently in effect.                                                                                                                                                     
|              | 
|1.2******     |  | Amendment No. 1 to the Certificate of Incorporation of Tata Communications Limited (reflecting name change to Tata Communications Limited).                                                                                                                       
|              | 
|1.3#          |  | Articles of Association of Tata Communications Limited, dated April 02, 2004.                                                                                                                                                                                     
|              | 
|1.4*          |  | Memorandum of Association of Tata Communications Limited, dated April 02, 2004.                                                                                                                                                                                   
|              | 
|1.5           |  | Memorandum and Articles of Association of Tata Communications Limited, dated April 3, 2008.                                                                                                                                                                       
|              | 
|1.6*          |  | Certificate for Commencement of Business, dated March 21, 1986                                                                                                                                                                                                    
|              | 
|1.7*          |  | Specimen Certificate for Equity Shares of Tata Communications Limited.                                                                                                                                                                                            
|              | 
|2.1*          |  | Form of Deposit Agreement, among Tata Communications Limited, The Bank of New York, as Depositary and owners and beneficial owners of American Depositary Receipts issued thereunder
(including as an exhibit, the form of American Depositary Receipt).          
|              | 
|2.2**         |  | Amendment No. 1 to Deposit Agreement, among Tata Communications Limited, The Bank of New York, as Depositary and owners and beneficial owners of American Depositary Receipts issued
thereunder (including as an exhibit the form of American Depositary Receipt).
|              | 
|2.3***        |  | Shareholders Agreement among the President of India, Panatone Finvest Limited, Tata Sons Limited, Tata Power Company Limited, Tata Iron and Steel Company Limited and Tata
Industries Limited, dated February 13, 2002.                                          
|              | 
|2.4***        |  | Share Purchase Agreement among the Government of India, Panatone Finvest Limited, Tata Sons Limited, Tata Power Company Limited, Tata Iron and Steel Company Limited and Tata
Industries Limited and the Company dated February 6, 2002.                          
|              | 
|4.2*****      |  | Stock and Asset Purchase Agreement among Tycom (US) Holdings, INC., Tyco Global Network Ltd., Tyco International Group, S.A., Tata Communications Bermuda Ltd. and the Company dated
November 1, 2004.                                                            
|              | 
|4.3*****      |  | License Agreement for national long distance services between the President of India and the Company, dated February 8, 2002.                                                                                                                                     
|              | 
|4.4****       |  | License Agreement for Provision of Internet Service (including Internet Telephony) between the President of India and the Company, dated May 3, 2002.                                                                                                             
|              | 
|4.5****       |  | License Agreement for International long distance services between the Department of Telecommunications, Government of India and the Company, dated February 5,
2004.                                                                                             
|              | 
|4.6#          |  | Letter from the Ministry of Communications, Department of Telecommunications regarding termination of the monopoly granted to Tata Communications Limited, dated September 7, 2000.                                                                               
|              | 
|4.7******     |  | Tata Brand Equity & Business Promotion Agreement, dated December 4, 2007, between Tata Sons Limited and the Company                                                                                                                                               
|              | 
|4.8           |  | Tata Brand Equity & Business Promotion Agreement, dated February
2nd2010, between Tata Sons Limited and the 33
subsidiaries of the Company                                                                                                                        
|              | 
|12.1          |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                           
|              | 
|12.2          |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                           
|              | 
|13.1          |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            



|* | Previously filed as an exhibit to the Companys Registration Statement on Form 20-F (Registration Statement No. 001-15118) filed with the Commission on
October 13, 2000 and incorporated herein by reference.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



99



---

##### Table of Contents

|** | Previously filed as an exhibit to the Companys Annual Report on Form 20-F (Registration No. 001-15118) filed with the Commission on October 1, 2001 and
incorporated herein by reference.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | Previously filed as an exhibit to the Schedule 13D filed on February 15, 2002, by Panatone Finvest Limited and Tata Sons Limited relating to the purchase of shares
of the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | Previously filed as an exhibit to the Companys Annual Report on Form 20-F (Registration No. 001-15118) filed with the Commission on September 27, 2002
and incorporated herein by reference.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|***** | Previously filed as an exhibit to the Companys Annual Report on Form 20-F (Registration No. 001-15118) filed with the Commission on October 2, 2006.
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|****** | Previously filed as an exhibit to the Companys Annual Report on Form 20-F (Registration No. 001-15118) filed with the Commission on October 14, 2008 and
incorporated herein by reference.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|# | Previously filed as an exhibit to the Companys Annual Report on Form 20-F (Registration No. 001-15118) filed with the Commission on September 29, 2004
and incorporated herein by reference.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



100



---

##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

September 30, 2010



TATA COMMUNICATIONS LIMITED,By:

/s/    Narasimhan
SrinathName:

Narasimhan SrinathTitle:

Managing Director and CEOBy:

/s/    Sanjay
BawejaName:

Sanjay BawejaTitle:

Chief Financial Officer




101



---

##### Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS

Unless otherwise specified or the context requires otherwise in this Annual Report on Form 20-F (Annual Report) the terms mentioned
below shall have the following meaning assigned to them;

3G means Third Generation;

ADC means Access Deficit Charge;

ADR means American Depository Receipt;

ADS means the Companys American Depositary Shares listed on the New York Stock Exchange;

AGR means Adjusted Gross Revenues;

AICTE means the All India Council for Technical Education;

Annual General Meeting means the meeting of shareholders held each year;

ANSI means American National Standards Institute;

ATM means Asynchronous Transfer Mode Services;

BEBP Agreement means the Brand Equity and Business Promotion Agreement entered into between Tata Communications Ltd and Tata Sons Ltd;

BITS means the Basic International Telecommunications Service license, issued by the Canadian Radio-television and
Telecommunications Commission to the Company;

BIX means Bahrain Internet Exchange maintained by Bahrain Telecommunications
Company;

BPO means Business Process Outsourcing;

Broadband means a high speed communications network in which frequency range is divided into multiple independent channels for
simultaneous transmission of signals;

Broadband Operators mean providers of Broadband services;

BSE means the Bombay Stock Exchange Limited;

BSNL means Bharat Sanchar Nigam Limited;

BT Group means the British Telecommunications PLC group of companies;

C&MA means the Construction and Maintenance Agreement, governing the construction and on-going maintenance of an undersea fibre
optic cable system;

C2C means C2C Pte Limited;

CAC means Carrier Access Code. which refers to a proposed Indian regulation that will, amongst other things, offer end user customers
the right to choose long distance services;

CAD means Canadian Dollar or the lawful currency of Canada;

CAGR means Compounded Annual Growth Rate;

Calling Cards means cards used to pay for telephone services which employ either a prepaid credit system or a credit-card-style system
of credit;



102



---

##### Table of Contents

Carrier means a provider of telecommunications services;

Carrier Connectivity Services means the selling of bandwidth only by the Company to its Carrier customers;

Carrier Data means the data telecommunications services provided by the Company to its Carrier customers;

CCI means Communications Commission of India;

CDMA means Code Division Multiple Access;

CDN means Content Delivery Network;

CEC means China Enterprise Communications Limited;

CII means the Confederation of Indian Industry;

CIN means Corporate Identity Number;

CIPRIS means the French company specializing in selling VNO services to mid-sized companies in Europe that was acquired by the Company
in January 2007;

Cochin Port Trust means the body of the Government of India that manages the port of Kochi;

CODM means Chief Operating Decision Makers;

Contact Center Services means the services offered by the Company that are network-based hosted, multi-tenant, multi-media contact
center services, including through voice, email, and text and web communication channels;

Content Delivery Networks means
the service offered by the Company that comprises a system of computers containing copies of data, placed at various points in a network so as to maximize bandwidth for access to the data from customers throughout the network;

CRTC means the Canadian Radio-television and Telecommunications Commission;

Data Centers means facilities used to house computer systems and associated components such as telecommunications and storage systems;

Depositary means the Bank of New York Mellon;

Digital Satellite News Gathering or DSNG means the use of satellite technology to record and transmit remote news
stories;

Digital Subscriber Line or DSL means a technology that provides high bandwidth network
connections to homes and small businesses;

DIL means Direct Internet Limited;

Dishnet means a broadband internet service provider in India that was acquired by the Company in 2004 and is now part of Tata Indicom
Broadband;

DoT means Department of Telecom, Government of India;

Double Taxation Treaty means a reciprocal arrangement between two countries not to retax the repatriated income that a firm or person
domiciled in one country earned in (and paid taxes on) the other.

Education Cess means a tax in India that all taxes are
subject to equal to 2% of the total tax payable;

Electronic Mail means digital electronic messages sent via the Internet;

EMEA means Europe, the Middle East and Africa;



103



---

##### Table of Contents

Enterprise means the area of the Companys business focused on selling services to
business customers who are the end users of the services;

Enterprise Data and Enterprise Data Business
means data telecommunications services provided by the Company to its Enterprise customers;

ERM means Enterprise-wide Risk
Management, which refers to an internal framework of the Company designed to optimally identify and manage Company risks;

ESMR means Enhanced Specialized Mobile Radio;

Ethernet means a family of frame-based computer networking technologies for local area networks (LANs);

Etisalat mean Emirates Telecommunications Corporation, a UAE-based telecommunications services provider;

EU means the European Union;

Extraordinary General Meeting means a meeting of shareholders held on an irregular basis;

FCC means the Federal Communications Commission in the US;

FCCBs means Foreign Currency Convertible Bonds;

FCPA means the Foreign Corrupt Practices Act, 1977, as amended from time to time;

FDI means Foreign Direct Investment;

FEA means the undersea fiber optic cable system known as Flag Europe Asia;

FEMA means the Indian Foreign Exchange Management Act, 1999, as amended from time to time;

FIIs means Foreign Institutional Investors registered with SEBI under applicable laws in India;

FIN 48 means an interpretation of the Financial Accounting Standards Board Statement No; 109 in respect of Accounting for Uncertainty
in Income Taxes;

Finance Act is the Act passed by the Parliament through which the annual fiscal policies of the
Government are governed and the tax laws are amended and duty rates are prescribed each year;

FIPB means the Foreign
Investment Promotion Board;

Fiscal Year means the Companys financial year running from 1 April to 31 March;

FLAG means the undersea fiber optic cable system known as Fiber Optic Link Around the Globe;

GAAP means Generally Accepted Accounting Principles;

Gartner Magic Quadrant means the proprietary research tool developed by Gartner Inc. a US-based research and advisory firm;

GBP means Pounds Sterling or the lawful currency of the United Kingdom;

GDR means Global Depositary Receipts;

GDS means Global Data Solutions;

General Meeting means a meeting of shareholders;

GHG means greenhouse gas emissions which comprise of gases in an atmosphere that absorb and emit radiation within the thermal infrared
range;



104



---

##### Table of Contents

Global 800 means a service offering international toll-free 800 numbers;

Global Internet Roaming means extending internet connectivity to a location that is different from the home location where the service
was registered;

Global Voice Solutions means the suite of services offered by the Company to seek to satisfy all the
telephony needs of its customers;

Global VPN means the services offered by the Company providing Virtual Private Networks
around the world;

GMC means the Global Management Committee, which refers to an internal committee of the Company
established to formulate strategies of the Company, including those pertaining to networks, expansion, entry into newer geographies and human resources;

GPSS means Gateway Packet Switching Services;

GSM means Global System for Mobile;

HCD means Home Country Direct;

HSE Council means Tata Communications Health Safety and Environment Council;

IBM AIX means the series of proprietary operating systems sold by IBM for several of its computer system platforms;

IDC means Internet Data Centre;

IDD or International Direct Dial means the capability to directly dial telephones in foreign countries from a home
or office phone;

iDEN means Integrated Dispatch Enhanced Network;

ILD means International Long Distance telephone services;

ILDO means International Long Distance Operator;

IMEWE means the undersea fiber optic cable system known as IMEWE;

Indian Companies Act means the Indian Companies Act, 1956;

Indian GAAP means Indian Generally Accepted Accounting Principles;

Information and Communications Technology means all technical means for processing and communicating information, including
methods for communication (communication protocols, transmission techniques, communications equipment, media (communication)), as well as techniques for storing and processing information (computing, data storage, etc);

Infrastructure Providers means the third parties that the Company purchases its infrastructure from;

IN-platform/infrastructure means the Intelligent Network platform and infrastructure;

INR means Indian Rupees or the lawful currency of India;

Intelligent Network means the network architecture intended both for fixed as well as mobile telecom networks that allow operators to
differentiate themselves by providing value-added services in addition to the standard telecom services;

Internal control
is a process, effected by an entitys board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: a) effectiveness and efficiency of
operations; b) reliability of financial reporting; and c) compliance with laws and regulations;

Internet Telephony means
the use of the Internet to make telephone calls;



105



---

##### Table of Contents

IP means Internet Protocol;

IP DSLAM means Internet Protocol Digital Subscriber Line Access Multiplexer;

IP Transit means the Internet transit service offered by the Company;

IP VPN means Internet Protocol Virtual Private Network;

IPL means International Private Lines;

IPLC means International Private Leased Circuit;

IRU means Indefeasible Right of Use;

ISDN means Integrated Services Digital Network;

ISO 27001 means the International Organization for Standardization (ISO) certification which formally specifies a management system
that is intended to bring information security under explicit management control;

ISP means Internet Service Providers;

ITAT means Income Tax Appellate Tribunal (India);

ITEs means International Telecommunications Entities;

ITFS means International Toll Free Service;

ITSP or Internet Telephony Service Provider means a provider of telephone services provided via the Internet;

ITU means International Telecommunications Union;

IUC means Interconnection Usage Charges, which refers to charges paid by one telecom operator to another for the use of the
latters network for originating, terminating, or transmitting a call;

JV means Joint Venture Company;

LCO means Local Cable Operator;

Local Number Services means the services offered by the Company allowing companies to offer their customers a number to dial at local
rates wherever any customer is dialing from;

Managed Hosting means the dedicated hosting service offered by the Company;

Managed IDS/IPS means managed intrusion, detection and prevention service which is a security service which prevents
intruders from gaining access to networks;

Managed Messaging means the services offered by the Company providing combined
messaging and managed network services;

MBPS means Mega Bytes Per Second;

MDNS means Managed Data Network Service;

MEF means Metro Ethernet Forum Test;

MHA means Ministry of Home Affairs, Government of India;

MII means Ministry of Information Industry of Peoples Republic of China;



106



---

##### Table of Contents

MMDS means Multichannel Multipoint Distribution Service;

MNO means Mobile Network Operator;

Mobile means the suite of services offered by the Company to mobile phone operators;

Mobile Operators mean providers of mobile telephone services;

Mobility Services means the services offered by the Company to its Mobile Operator customers;

Mobily is the trade name of Saudi Arabias second Telecommunications company, Etihad-Etisalat consortium;

MPLS means Multi-Protocol Label Switching;

MSSPs or Managed Security Service Providers means the providers of outsourced network security services;

MTNL means Mahanagar Telephone Nigam Limited;

MVNO means Mobile Virtual Network Operator;

NABCB means National Accreditation Board for Certifying Bodies;

Nawras is a mobile communications provider in the Sultanate of Oman;

Neotel means Neotel Pty Ltd;

Networking means a network of telecommunications links and nodes arranged so that messages may be passed from one part of the network
to another over multiple links and through various nodes;

NGN means Next Generation Networks;

NLD means National Long Distance telephone services;

NPLC means National Private Leased Circuit;

NRI means Non Resident Indians and refers to a person resident outside India, who is a citizen of India or a person of Indian origin
as defined under the Indian Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000;

NSE means National Stock Exchange of India Limited;

NYSE means New York Stock Exchange;

OCBs means Overseas Corporate Bodies and refers to a company, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts;

OCS means Overseas Communications
Service;

OSS-BSS Systems means Operations Support SystemsBusiness Support Systems;

OTC means Over the Counter;

PP&E means Property, Plant and Equipment;

PRC means Peoples Republic of China;

Promoter refers to the Strategic Partner, its principals and the Government of India;

QCI means Quality Council of India;



107



---

##### Table of Contents

QDI means Qualified Dividend Income;

QFC means Qualified Foreign Corporation;

Qtel means Qatar Telecom (Qtel) Q.S.C.;

RA means Remote Access;

RBI means Reserve Bank of India established under the Reserve Bank of India Act, 1934;

RBU means Retail Business Undertaking;

Retail and Retail Business means the selling of Company services to individual end-users such as the trueroots calling card service;

Retail Broadband means the selling of Broadband services by the Company to individual end-users in India;

Retail WiMax means WiMAX services available to retail customers;

Rs. means Indian Rupees and refers to the currency of India;

SAFE means the undersea fiber optic cable system known as SAFE;

SAS 70 Type I & II means the licenses issued by the American Institute of Certified Public Accountants for Statement on Auditing
Standards No 70;

SAT-3 means the undersea fiber optic cable system known as SAT;

SCCP means Signaling Connection Control Part;

SDH means Synchronous Digital Hierarchy;

SEACom means the undersea fiber optic cable system known as SEACom;

SEBI means Securities and Exchange Board of India constituted under the Securities and Exchange Board of India Act, 1992;

SEC means Securities and Exchange Commission established under the Securities Exchange Act, 1934;

Seven Star means Seven Star Dot Com Pvt Ltd;

SFAS means Statements of Financial Accounting Standards;

SHA or Shareholders Agreement means the Shareholders Agreement dated 13th February 2002, entered into between
the Government and the Strategic Partner along with its principals, to record their agreement as to the manner in which the Companys commercial operations, corporate governance and other affairs will be conducted and to grant to each other
certain other rights and obligations;

Shares or Equity Shares means the equity shares of the Company;

SHE means SMS Hub Enablement;

SMART means Signaling, Monitoring, Alarming and Reporting Tool;

SME means Small and Medium Enterprises;

SMS means Short Messaging Service;

SMW 3 or SEA-ME-WE 3 means the undersea fiber optic cable system known as SEA-ME-WE 3;



108



---

##### Table of Contents

SMW 4 or SEA-ME-WE 4 means the undersea fiber optic cable system known
as SEA-ME-WE 4;

SNOSPV means VSNL SNO SPV Pte Ltd;

SONET means Synchronous Optical Networking;

SOX means Sarbanes-Oxley Act, 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002;

SPA or Share Purchase Agreement refers to Share Purchase Agreement dated 6th February 2002, among the
Company , the Government, the Strategic Partner wherein the Government agreed to sell to the Strategic Partner, 25% of the equity shareholding of the Company;

Space Segment means usage time of a satellite service;

SS7 means Signaling System #7;

STM means Synchronous Transport Module;

STPI means Software Technology Park of India;

Strategic Partner means Panatone Finvest Limited, and refers to the strategic partner of the Government of India in relation to the
disinvestment of the Company in 2002;

STT means Securities Transaction Tax;

TBEM means the Tata Business Excellence Model which refers to an internal framework establishing best practices for Tata companies;

TCBIL means Tata Communications Banking InfraSolutions Limited;

TCBL means Tata Communications (Bermuda) Ltd;

TCIPL means Tata Communications International Pte Limited;

TCISL means Tata Communications Internet Services Limited;

TCLL means Tata Communications Lanka Limited;

TCS means Tata Consultancy Services;

TCSAI means Tata Communications Services (America) Inc;

TCTS & TCTSL means Tata Communications Transformation Services Limited;

TDM means Time-division multiplexing which is a type of digital multiplexing in which two or more signals or bit streams are
transferred apparently simultaneously as sub-channels in one communication channel, but are physically taking turns on the channel;

TDSAT means Telecom Disputes Settlement Appellate Tribunal established under the Telecom Regulatory Authority of India Act, 1997;

Teleglobe means Teleglobe International Holdings Limited;

Telepresence means the service offered by the Company that provides a rich-media video conferencing solution;

Telepresence Exchange Service means the service offered by the Company that allows meetings to be conducted between any connected
public or private Telepresence rooms around the world;



109



---

##### Table of Contents

TGN means the Tyco Global Network renamed as the Tata Global Network;

TGN-IA means the undersea fiber optic cable system known as TGN-Intra Asia;

TGN-WER means the undersea fiber optic cable owned by the Company which forms a ring in Western Europe between the United Kingdom,
Spain and Portugal;

the Code means the Indian Code of Civil Procedure, 1908;

TIC means the undersea fiber optic cable system known as Tata Indicom;

TICSCS means the undersea fiber optic cable system known as Tata Indicom Chennai Singapore;

TIEBU means the Tata Indicom Enterprise Business Unit;

Tier 1 ISP means an Internet Service Provider with a Tier 1 network being a network that can reach every other network on the
Internet;

TIL means Tata Industries Limited;

TPC means Tata Power Company Limited;

TRAI means Telecom Regulatory Authority of India established under the Telecom Regulatory Authority of India Act, 1997;

TTML means Tata Teleservices (Maharashtra) Limited;

TTSL means Tata Teleservices Limited;

TV Uplinking means the use of satellites for live television broadcasting;

UAE means United Arab Emirates;

UIFN means the service sold by the Company providing universal international freephone numbers;

UMTS means Universal Mobile Telecommunications System;

Unconditional Compliance means Compliance with all the requirements of the law without any presumption or condition;

Unified Message Service means the integration of different electronic messaging and communications media technologies into a single
interface;

Universal 800 means a service offering international toll-free 800 numbers;

US GAAP means United States generally accepted accounting principles;

UTL means United Telecom Limited;

VAS means Value Added Service;

VBL means VSNL Broadband Limited;

VIPL means VSNL International Pte Limited;

Virtualization/Cloud Computing means a form of computing in which dynamically scalable and often virtual resources are provided as a
service over the Internet;

VISL means VSNL Internet Services, Ltd;

VNO means virtual network operator;



110



---

##### Table of Contents

Voice Mail means is an electronic centralized system of managing telephone messages for a
large group of people;

Voice Peering means the forwarding of calls from one Internet Service Telephony Provider to another
using voice over IP technology;

VoIP means Voice over Internet Protocol;

VPN means Virtual Private Network;

VSNL means Videsh Sanchar Nigam Limited;

VTS means Voice Termination Services;

WAN means Wide Area Network;

WASC means the undersea fiber optic cable system known as the West-African Submarine Cable;

Web Portal means a website that offers a broad array of resources and services, such as email, forums, search engines, and online
shopping malls;

Web Telephony means the use of the Internet to make telephone calls;

WGR means Wireless Global Roaming service;

Wi-Fi means Wireless Fidelity;

Wimax means Worldwide Interoperability for Microwave Access;

Wireless Broadband Access means a technology aimed at providing wireless access to data networks with high data rates;

Wireless Global Roaming means the services offered by the Company helping the customers of Mobile Operators receive mobile services
whilst travelling abroad in countries with an incompatible mobile network to the country where the roaming customer originates from;

WPC means Wireless Planning and Co-ordination Wing of the Ministry of Communications, Government if India;

WTO means World Trade Organization;

YMPE means Years Maximum Pensionable Earnings;

ZAR means South African Rand or the lawful currency of South Africa;



111



---

##### Table of Contents

Table of Contents

TATA COMMUNICATIONS LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                       |  |    
|------------------------------------------------------------------------------------------------------ |  | ---
|Consolidated Financial Statements of Tata Communications Limited                                       |  |    
|                                                                                                       | 
|Reports of Independent Registered Public Accounting Firm                                               |  | F-2
|Consolidated Balance Sheets as of March 31, 2009 and 2010                                              |  | F-4
|Consolidated Statements of Operations for each of the years ended March 31, 2008, 2009 and 2010        |  | F-5
|Statement of Changes in Shareholders Equity for each of the years ended March 31, 2008, 2009 and 2010 |  | F-6
|Consolidated Statements of Cash Flows for each of the years ended March 31, 2008, 2009 and 2010        |  | F-7
|Notes to Consolidated Financial Statements                                                             |  | F-8



F-1



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Tata Communications Limited

Mumbai, India

We have audited the accompanying consolidated balance sheets of Tata Communications Limited and subsidiaries (the Company) as of
March 31, 2009 and 2010, and the related consolidated statements of operations, changes in shareholders equity, and cash flows for each of the three years in the period ended March 31, 2010. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we 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 management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Tata
Communications Limited and subsidiaries as of March 31, 2009 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2010, in conformity with accounting principles
generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Companys internal control over financial reporting as of March 31, 2010, based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated September 30, 2010, expressed an unqualified opinion on the Companys internal control over financial reporting.

Our audit for the year ended and as of March 31, 2010, also comprehended the translation of Indian rupee amounts into U.S. dollar amounts, and in
our opinion, such translation has been made in conformity with the basis stated in Note 2 (z). Such U.S. dollar amounts are presented solely for the convenience of readers in the United States of America.

Deloitte Haskins & Sells

Chartered
Accountants

Mumbai, India

September 30, 2010



F-2



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Tata Communications Limited

Mumbai, India

We have audited the internal control over financial reporting of Tata Communications Limited and subsidiaries (the Company) as of
March 31, 2010, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in the Managements report on Internal Control
over Financial Reporting, management is not required to evaluate the internal controls of entities accounted for under the equity method. Accordingly, the internal controls of these entities, which contributed a net loss of Rs 3,192 million to
the net loss for the year, have not been assessed, except relating to the Companys controls over the recording and related disclosures of amounts relating to the investments that are recorded in the consolidated financial statements.

The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in Item 15 under Controls and Procedures of the accompanying Form 20F titled Managements Report on Internal Control over Financial Reporting. Our responsibility is
to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive
and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override
of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to
the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company has maintained, in all material respects, effective internal control over financial reporting as of March 31, 2010,
based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended March 31, 2010 of the Company and our report dated September 30, 2010, expressed an unqualified opinion on those financial statements.

Deloitte Haskins & Sells

Chartered
Accountants

Mumbai, India

September 30, 2010



F-3



---

##### Table of Contents

Tata Communications Limited

Consolidated Balance Sheets

As of March 31, 2009 and 2010



|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------- | - |  | ------- | - |  | ------- | -
|                                                                                                                                                                                                                                        |  | Rs.2009                                           |   |  | Rs.2010 |   |  | US$2010 |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|                                                                                                                                                                                                                                        |  | (in millions, except share and per share amounts) |  
|ASSETS                                                                                                                                                                                                                                  |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Current assets                                                                                                                                                                                                                          |  |                                                   |   |  |         |   |  |         |  
|Cash and cash equivalents                                                                                                                                                                                                               |  | 5,050                                             |   |  | 2,389   |   |  | 53      |  
|Short-term bank deposits                                                                                                                                                                                                                |  | 2,671                                             |   |  | 9       |   |  |        |  
|Investments                                                                                                                                                                                                                             |  | 7,089                                             |   |  | 4,641   |   |  | 103     |  
|Accounts receivable (net of allowances of Rs.3,218 million and Rs. 2,502 million as of March 31, 2009 and 2010)
(includes Rs. 1,434 million and Rs. 1,492 million as of March 31, 2009 and 2010 due from related parties)               |  | 25,851                                            |   |  | 20,124  |   |  | 448     |  
|Prepaid expenses and other current assets (net of allowances of Rs. 663 million and Rs 655 million as of
March 31, 2009 and 2010) (includes Rs. 472 million and Rs. 124 million as of March 31, 2009 and 2010 due from related parties) |  | 7,455                                             |   |  | 6,925   |   |  | 154     |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Total current assets                                                                                                                                                                                                                    |  | 48,116                                            |   |  | 34,088  |   |  | 758     |  
|Investments                                                                                                                                                                                                                             |  | 4,103                                             |   |  | 4,099   |   |  | 91      |  
|Investments in equity method investees                                                                                                                                                                                                  |  | 120                                               |   |  | 257     |   |  | 6       |  
|Property, plant and equipment, net                                                                                                                                                                                                      |  | 103,713                                           |   |  | 106,117 |   |  | 2,361   |  
|Intangible assets, net                                                                                                                                                                                                                  |  | 3,237                                             |   |  | 2,869   |   |  | 64      |  
|Goodwill                                                                                                                                                                                                                                |  | 6,287                                             |   |  | 5,809   |   |  | 129     |  
|Advance income taxes (net)                                                                                                                                                                                                              |  | 14,205                                            |   |  | 21,617  |   |  | 481     |  
|Other non-current assets (includes Rs. 5,915 million and Rs. 6,670 million as of March 31, 2009 and 2010 due from
related parties)                                                                                                      |  | 12,552                                            |   |  | 11,902  |   |  | 265     |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|Total assets                                                                                                                                                                                                                            |  | 192,333                                           |   |  | 186,758 |   |  | 4,155   |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                                                    |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Current liabilities                                                                                                                                                                                                                     |  |                                                   |   |  |         |   |  |         |  
|Accounts payable (includes Rs. 1,341 million and Rs. 937 million as of                                                                                                                                                                  |  |                                                   |   |  |         |   |  |         |  
|March 31, 2009 and 2010 due to related parties)                                                                                                                                                                                         |  | 34,063                                            |   |  | 30,123  |   |  | 670     |  
|Short-term debt and current portion of long-term debt                                                                                                                                                                                   |  | 11,628                                            |   |  | 18,045  |   |  | 401     |  
|Accrued expenses and other current liabilities (includes Rs. 1,487 million and Rs. 1,399 million as of March 31, 2009
and 2010 due to related parties)                                                                                  |  | 19,558                                            |   |  | 13,509  |   |  | 301     |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|Total current liabilities                                                                                                                                                                                                               |  | 65,249                                            |   |  | 61,677  |   |  | 1,372   |  
|Long-term debt, net of current portion                                                                                                                                                                                                  |  | 48,601                                            |   |  | 43,551  |   |  | 969     |  
|Other non-current liabilities (includes Rs. 1,741 million and Rs. 1,741 million as of March 31, 2009 and 2010 due to
related parties)                                                                                                   |  | 25,966                                            |   |  | 34,211  |   |  | 761     |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|Total liabilities                                                                                                                                                                                                                       |  | 139,816                                           |   |  | 139,439 |   |  | 3,102   |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|Commitments and contingencies (See Note 29)                                                                                                                                                                                             |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Shareholders equity                                                                                                                                                                                                                    |  |                                                   |   |  |         |   |  |         |  
|Equity shares par value Rs. 10 each                                                                                                                                                                                                     |  |                                                   |   |  |         |   |  |         |  
|Authorized: 300,000,000 shares                                                                                                                                                                                                          |  |                                                   |   |  |         |   |  |         |  
|Issued and outstanding 285,000,000 shares as of March 31, 2009 and 2010                                                                                                                                                                 |  | 2,850                                             |   |  | 2,850   |   |  | 64      |  
|Additional paid-in-capital                                                                                                                                                                                                              |  | 15,770                                            |   |  | 15,770  |   |  | 351     |  
|Retained earnings                                                                                                                                                                                                                       |  | 34,021                                            |   |  | 28,902  |   |  | 643     |  
|Accumulated other comprehensive income/(loss)                                                                                                                                                                                           |  | (174                                              | ) |  | (261    | ) |  | (6      | )
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Total shareholders equity                                                                                                                                                                                                              |  | 52,467                                            |   |  | 47,261  |   |  | 1,052   |  
|Non-controlling interest                                                                                                                                                                                                                |  | 50                                                |   |  | 58      |   |  | 1       |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|Total equity                                                                                                                                                                                                                            |  | 52,517                                            |   |  | 47,319  |   |  | 1,053   |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  
|                                                                                                                                                                                                                                        |  |                                                   |  
|Total liabilities and shareholders equity                                                                                                                                                                                              |  | 192,333                                           |   |  | 186,758 |   |  | 4,155   |  
|                                                                                                                                                                                                                                        |  |                                                   |   |  |         |   |  |         |  

See accompanying notes to consolidated financial statements



F-4



---

##### Table of Contents

Tata Communications Limited

Consolidated Statement of Operations

For each of the years ended March 31, 2008, 2009 and 2010



|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- | - |  | ----------- | - |  | ----------- | - |  | ----------- | -
|                                                                                                                                                                                                                                                                                |  | Rs.
2008                                                   |   |  | Rs.
2009    |   |  | Rs.
2010    |   |  | US$
2010    |  
|                                                                                                                                                                                                                                                                                |  |                                                            |  
|                                                                                                                                                                                                                                                                                |  | (in millions, except share, per share and per ADS amounts) |  
|Operating revenues:                                                                                                                                                                                                                                                             |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Revenues from telecommunication services (includes Rs. 5,114 million, Rs. 5,846 million and Rs. 4,670 million in
fiscals 2008, 2009 and 2010 from related parties)                                                                                                              |  | 82,331                                                     |   |  | 97,295      |   |  | 106,080     |   |  | 2,360       |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Cost of revenues                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Network and transmissions cost (excluding depreciation of Rs. 6,668 million, Rs. 8,114 million and Rs.
11,357 million in fiscals 2008, 2009 and 2010) (includes Rs. 1,610 million, Rs. 1,444 million and Rs. 2,634 million in fiscals 2008, 2009 and 2010 from related parties) |  | 46,717                                                     |   |  | 51,201      |   |  | 61,452      |   |  | 1,367       |  
|Licence fees                                                                                                                                                                                                                                                                    |  | 848                                                        |   |  | 863         |   |  | 794         |   |  | 18          |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Total cost of revenues                                                                                                                                                                                                                                                          |  | 47,565                                                     |   |  | 52,064      |   |  | 62,246      |   |  | 1,385       |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Operating costs                                                                                                                                                                                                                                                                 |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Depreciation and amortization                                                                                                                                                                                                                                                   |  | 7,358                                                      |   |  | 10,180      |   |  | 14,074      |   |  | 313         |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Other operating costs (includes Rs. 698 million, Rs. 1,028 million and Rs. 1,072 million in fiscals 2008, 2009 and 2010
to related parties)                                                                                                                                     |  | 27,200                                                     |   |  | 30,394      |   |  | 31,323      |   |  | 697         |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Total operating costs                                                                                                                                                                                                                                                           |  | 34,558                                                     |   |  | 40,574      |   |  | 45,397      |   |  | 1,010       |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Operating income/(loss)                                                                                                                                                                                                                                                         |  | 208                                                        |   |  | 4,657       |   |  | (1,563      | ) |  | (35         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Non-operating income, net:                                                                                                                                                                                                                                                      |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Gain on sale of investments                                                                                                                                                                                                                                                     |  | 145                                                        |   |  | 4,289       |   |  | 347         |   |  | 8           |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Interest income on income tax refunds                                                                                                                                                                                                                                           |  | 167                                                        |   |  |            |   |  | 2,183       |   |  | 49          |  
|Interest income from banks and others (includes Rs. 40 million, Rs. 188 million and Rs. 552 million in fiscals
2008, 2009 and 2010 from related parties)                                                                                                                        |  | 100                                                        |   |  | 491         |   |  | 673         |   |  | 15          |  
|Interest expense                                                                                                                                                                                                                                                                |  | (1,469                                                     | ) |  | (2,732      | ) |  | (4,188      | ) |  | (93         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Other non-operating income, net (includes Rs. 123 million, Rs. 100 million and Rs. 64 million in fiscals
2008, 2009 and 2010 from related parties)                                                                                                                              |  | 1,767                                                      |   |  | 971         |   |  | 1,165       |   |  | 25          |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Total non-operating income, net                                                                                                                                                                                                                                                 |  | 710                                                        |   |  | 3,019       |   |  | 180         |   |  | 4           |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Income/(loss) before income taxes                                                                                                                                                                                                                                               |  | 918                                                        |   |  | 7,676       |   |  | (1,383      | ) |  | (31         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Income tax (expense)/benefit                                                                                                                                                                                                                                                    |  | (1,280                                                     | ) |  | (2,430      | ) |  | 969         |   |  | 22          |  
|Dividend tax                                                                                                                                                                                                                                                                    |  | (218                                                       | ) |  | (218        | ) |  | (218        | ) |  | (5          | )
|Equity in net loss of equity method investees                                                                                                                                                                                                                                   |  | (393                                                       | ) |  | (1,120      | ) |  | (3,192      | ) |  | (71         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Net income (loss)                                                                                                                                                                                                                                                               |  | (973                                                       | ) |  | 3,908       |   |  | (3,824      | ) |  | (85         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Net income attributable to noncontrolling interest                                                                                                                                                                                                                              |  | (1                                                         | ) |  | (22         | ) |  | (12         | ) |  |            |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Net income (loss) attributable to Tata Communications Limited                                                                                                                                                                                                                   |  | (974                                                       | ) |  | 3,886       |   |  | (3,836      | ) |  | (85         | )
|                                                                                                                                                                                                                                                                                |  |                                                            |   |  |             |   |  |             |   |  |             |  
|                                                                                                                                                                                                                                                                                |  |                                                            |   | 
|Per share Information:                                                                                                                                                                                                                                                          |  |                                                            |   |  |             |   |  |             |   |  |             |  
|Basic earnings (loss) per equity share                                                                                                                                                                                                                                          |  | (3.42                                                      | ) |  | 13.64       |   |  | (13.46      | ) |  | (0.30       | )
|Weighted number of equity shares outstanding                                                                                                                                                                                                                                    |  | 285,000,000                                                |   |  | 285,000,000 |   |  | 285,000,000 |   |  | 285,000,000 |  
|Basic earnings (loss) per ADS (each ADS represents two equity shares)                                                                                                                                                                                                           |  | (6.84                                                      | ) |  | 27.28       |   |  | (26.92      | ) |  | (0.60       | )

See
accompanying notes to consolidated financial statements



F-5



---

##### Table of Contents

Tata Communications Limited

Statements of Changes in Shareholders Equity

For each of the years ended March 31, 2008, 2009 and 2010



|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- |  | ------------------ |  | ------------------------ |  | ---------------- | - |  | -------------------------------------------- | ---- | - | ------------------------ | --- | ------ | ----------------------- |  | --- | ---------------------------- | - |  | --- | ------ | -
|                                                                                                                     |  | Numberof equityshares                         |  | Equitysharecapital |  | Additionalpaid-incapital |  | Retainedearnings |   |  | Accumulatedothercomprehensiveincome / (loss) |      |   | Totalshareholdersequity |     |        | Non-controllinginterest |  |     | Comprehensiveincome / (loss) |  
|                                                                                                                     |  | (in millions, except number of equity shares) | 
|Balance at March 31, 2007                                                                                            |  | 285,000,000                                   |  | Rs. 2,850          |  | Rs. 15,770               |  | Rs. 33,677       |   |  | Rs.                                          | 11   |   |                          | Rs. | 52,308 |                         |  |     |                              |   |  |     |        |  
|Net loss                                                                                                             |  |                                               |  |                    |  |                          |  | (974             | ) |  |                                              |      |   |                          |     | (974   | )                       |  |     | 1                            |   |  |     | (973   | )
|Sale of investment in subsdiary                                                                                      |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     | 31                           |   |  |     |        |  
|Net unrealized gain on available-for-sale securities, net of realized gains and net of tax of Rs 63 million.         |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 175  |   |                          |     | 175    |                         |  |     |                              |   |  |     | 175    |  
|Foreign currency translation adjustment                                                                              |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 387  |   |                          |     | 387    |                         |  |     |                              |   |  |     | 387    |  
|Dividends paid                                                                                                       |  |                                               |  |                    |  |                          |  | (1,283           | ) |  |                                              |      |   |                          |     | (1,283 | )                       |  |     |                              |   |  |     |        |  
|Effective portion of net loss on derivative instrument designated as cash flow hedge                                 |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | (248 | ) |                          |     | (248   | )                       |  |     |                              |   |  |     | (248   | )
|Funded status on employee benefit plans                                                                              |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 422  |   |                          |     | 422    |                         |  |     |                              |   |  |     | 422    |  
|Cumulative effect of a change in accounting-principle adoption related to uncertain tax position                     |  |                                               |  |                    |  |                          |  | (2               | ) |  |                                              |      |   |                          |     | (2     | )                       |  |     |                              |   |  |     |        |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Comprehensive loss                                                                                                   |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | (237   | )
|Attributable to                                                                                                      |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|- Equity Shareholders                                                                                                |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | (238   | )
|- Non-controlling interest                                                                                           |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | 1      |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | (237   | )
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Balance at March 31, 2008                                                                                            |  | 285,000,000                                   |  | 2,850              |  | 15,770                   |  | 31,418           |   |  |                                              | 747  |   |                          |     | 50,785 |                         |  |     | 32                           |   |  |     |        |  
|Net income                                                                                                           |  |                                               |  |                    |  |                          |  | 3,886            |   |  |                                              |      |   |                          |     | 3,886  |                         |  |     | 22                           |   |  |     | 3,908  |  
|Net unrealized loss on available-for-sale securities, net of realized gain and net of tax benefit of Rs. 90
million. |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | (219 | ) |                          |     | (219   | )                       |  |     |                              |   |  |     | (219   | )
|Foreign currency translation adjustment                                                                              |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | (937 | ) |                          |     | (937   | )                       |  |     |                              |   |  |     | (937   | )
|Dividends paid (includes Rs. 4 million paid to non-controlling interest)                                             |  |                                               |  |                    |  |                          |  | (1,283           | ) |  |                                              |      |   |                          |     | (1,283 | )                       |  |     | (4                           | ) |  |     |        |  
|Foreign currency gain on equity method investees                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |       |  
|Effective portion of net loss on derivative instrument designated as cash flow hedge                                 |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | (28  | ) |                          |     | (28    | )                       |  |     |                              |   |  |     | (28    | )
|Funded status on employee benefit plans net of tax expense of Rs. 271 million                                        |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 263  |   |                          |     | 263    |                         |  |     |                              |   |  |     | 263    |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Comprehensive income                                                                                                 |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | 2,987  |  
|Attributable to                                                                                                      |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|- Equity Shareholders                                                                                                |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | 2,965  |  
|- Non-controlling interest                                                                                           |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | 22     |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | 2,987  |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Balance at March 31, 2009                                                                                            |  | 285,000,000                                   |  | 2,850              |  | 15,770                   |  | 34,021           |   |  |                                              | (174 | ) |                          |     | 52,467 |                         |  |     | 50                           |   |  |     |        |  
|Net loss                                                                                                             |  |                                               |  |                    |  |                          |  | (3,836           | ) |  |                                              |      |   |                          |     | (3,836 | )                       |  |     | 12                           |   |  |     | (3,824 | )
|Net unrealized gain on available-for-sale securities, net of realized gain and net of tax expense of Rs. 20
million. |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 18   |   |                          |     | 18     |                         |  |     |                              |   |  |     | 18     |  
|Foreign currency translation adjustment                                                                              |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 586  |   |                          |     | 586    |                         |  |     | 1                            |   |  |     | 587    |  
|Dividends paid (includes Rs. 5 million paid to non-controlling interest)                                             |  |                                               |  |                    |  |                          |  | (1,283           | ) |  |                                              |      |   |                          |     | (1,283 | )                       |  |     | (5                           | ) |  |     |        |  
|Effective portion of net gain on derivative instrument designated as cash flow hedge                                 |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | 20   |   |                          |     | 20     |                         |  |     |                              |   |  |     | 20     |  
|Funded status on employee benefit plans net of tax benefit of Rs 332 million                                         |  |                                               |  |                    |  |                          |  |                  |   |  |                                              | (711 | ) |                          |     | (711   | )                       |  |     |                              |   |  |     | (711   | )
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Comprehensive loss                                                                                                   |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | (3,910 | )
|Attributable to                                                                                                      |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|- Equity Shareholders                                                                                                |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | (3,923 | )
|- Non-controlling interest                                                                                           |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     | 13     |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  | Rs. | (3,910 | )
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|Balance at March 31, 2010                                                                                            |  | 285,000,000                                   |  | 2,850              |  | 15,770                   |  | 28,902           |   |  |                                              | (261 | ) |                          |     | 47,261 |                         |  |     | 58                           |   |  |     |        |  
|                                                                                                                     |  |                                               |  |                    |  |                          |  |                  |   |  |                                              |      |   |                          |     |        |                         |  |     |                              |   |  |     |        |  
|                                                                                                                     |  |                                               |  | US$     64         |  | US$     351              |  | US$     643      |   |  | US$                                          | (6   | ) |                          | US$ | 1,052  |                         |  | US$ | 1                            |   |  | US$ | (87    | )

As of March 31, 2010 retained
earnings include Rs. 4,573 million restricted for non-convertible debenture (NCD) redemption

See accompanying notes to
consolidated financial statements



F-6



---

##### Table of Contents

Tata Communications Limited

Consolidated Statements of Cash Flows

For each of the years ended March 31, 2008, 2009 and 2010



|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | - |  | ------- | - |  | -------- | - |  | ------- | -
|                                                                                                                                      |  | Rs.2008       |   |  | Rs.2009 |   |  | Rs.2010  |   |  | US$2010 |  
|                                                                                                                                      |  |               |  
|                                                                                                                                      |  | (in millions) |  
|Cash flows from operating activities:                                                                                                 |  |               |   |  |         |   |  |          |   |  |         |  
|Net income (loss)                                                                                                                     |  | (973          | ) |  | 3,908   |   |  | (3,824   | ) |  | (85     | )
|Adjustment to reconcile net income to net cash provided by operating activities:                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Depreciation and amortization                                                                                                         |  | 7,358         |   |  | 10,180  |   |  | 14,074   |   |  | 313     |  
|Deferred income tax (benefit) expense                                                                                                 |  | (308          | ) |  | 650     |   |  | 882      |   |  | 20      |  
|Loss on sale of investment in subsidiary                                                                                              |  | 4             |   |  |        |   |  |         |   |  |        |  
|Loss (gain) on sale of property, plant and equipment, net                                                                             |  | (4            | ) |  | 15      |   |  | 10       |   |  |        |  
|Equity in net loss of equity method investees                                                                                         |  | 393           |   |  | 1,120   |   |  | 3,192    |   |  | 71      |  
|Gain on sale of available-for-sale investments                                                                                        |  | (145          | ) |  | (385    | ) |  | (347     | ) |  | (8      | )
|Gain on sale of investment, at cost                                                                                                   |  |              |   |  | (3,904  | ) |  |         |   |  |        |  
|Provision for doubtful debts (Net of bad debts recovered)                                                                             |  | 1,024         |   |  | 1,666   |   |  | 823      |   |  | 18      |  
|Net change in:                                                                                                                        |  |               |   |  |         |   |  |          |   |  |         |  
|Accounts receivable                                                                                                                   |  | (1,667        | ) |  | (8,130  | ) |  | 23       |   |  | 1       |  
|Advance income taxes, net                                                                                                             |  | (2,422        | ) |  | (1,892  | ) |  | (6,876   | ) |  | (153    | )
|Prepaid expenses and other current assets                                                                                             |  | (1,958        | ) |  | (811    | ) |  | (235     | ) |  | (5      | )
|Other non-current assets                                                                                                              |  | (2,465        | ) |  | (623    | ) |  | (1,176   | ) |  | (26     | )
|Accounts payable                                                                                                                      |  | 3,797         |   |  | 8,130   |   |  | 2,924    |   |  | 65      |  
|Accrued expenses and other current liabilities                                                                                        |  | 4,383         |   |  | 644     |   |  | (4,345   | ) |  | (97     | )
|Other non-current liabilities                                                                                                         |  | 3,384         |   |  | 4,156   |   |  | 9,288    |   |  | 207     |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Net cash provided by operating activities                                                                                             |  | 10,401        |   |  | 14,724  |   |  | 14,413   |   |  | 321     |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Cash flows from investing activities:                                                                                                 |  |               |   |  |         |   |  |          |   |  |         |  
|Purchase of property, plant and equipment                                                                                             |  | (21,927       | ) |  | (28,571 | ) |  | (24,180  | ) |  | (538    | )
|Purchase of intangible assets                                                                                                         |  | (380          | ) |  | (494    | ) |  | (882     | ) |  | (20     | )
|Proceeds from sale of property, plant and equipment                                                                                   |  | 60            |   |  | 44      |   |  | 208      |   |  | 5       |  
|Purchase of available-for-sale investments                                                                                            |  | (66,450       | ) |  | (78,402 | ) |  | (102,678 | ) |  | (2,284  | )
|Proceeds from sale of available-for-sale investments                                                                                  |  | 72,185        |   |  | 75,733  |   |  | 105,504  |   |  | 2,347   |  
|Proceeds from sale of investment in subsidiary                                                                                        |  | 27            |   |  |        |   |  |         |   |  |        |  
|Purchase of convertible promissory note                                                                                               |  |              |   |  | (585    | ) |  |         |   |  |        |  
|Advance against investment                                                                                                            |  |              |   |  | (712    | ) |  |         |   |  |        |  
|Proceeds from sale of investment, at cost                                                                                             |  |              |   |  | 4,242   |   |  |         |   |  |        |  
|Purchase of shares in equity method investees                                                                                         |  | (92           | ) |  | (890    | ) |  | (808     | ) |  | (18     | )
|Loans given to equity method investees                                                                                                |  | (219          | ) |  | (2,862  | ) |  | (1,284   | ) |  | (29     | )
|Acquisition of business, net of cash acquired                                                                                         |  |              |   |  |        |   |  | (149     | ) |  | (3      | )
|Change in restricted cash                                                                                                             |  | 93            |   |  | 43      |   |  | 3        |   |  |        |  
|Short-term bank deposits                                                                                                              |  | 29            |   |  | (2,662  | ) |  | 2,662    |   |  | 59      |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Net cash used in investing activities                                                                                                 |  | (16,674       | ) |  | (35,116 | ) |  | (21,604  | ) |  | (481    | )
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Cash flows from financing activities:                                                                                                 |  |               |   |  |         |   |  |          |   |  |         |  
|Proceeds from long term borrowings                                                                                                    |  | 1,018         |   |  | 21,991  |   |  | 10,386   |   |  | 231     |  
|Long-term borrowings repaid                                                                                                           |  | (871          | ) |  | (71     | ) |  | (997     | ) |  | (22     | )
|Proceeds from short term borrowings                                                                                                   |  | 25,226        |   |  | 19,865  |   |  | 28,212   |   |  | 628     |  
|Short-term borrowings repaid                                                                                                          |  | (17,455       | ) |  | (17,629 | ) |  | (32,289  | ) |  | (718    | )
|Proceeds/(repayment) of bank overdrafts                                                                                               |  | 201           |   |  | (220    | ) |  | 184      |   |  | 4       |  
|Payment of finance lease obligations                                                                                                  |  | (98           | ) |  | (101    | ) |  | (22      | ) |  |        |  
|Dividends paid (includes Rs. 966 million, Rs. 966 million and Rs. 946 million in fiscals 2008, 2009 and 2010 paid to
related parties) |  | (1,283        | ) |  | (1,283  | ) |  | (1,283   | ) |  | (29     | )
|Dividend paid to noncontrolling interest of subsidiary                                                                                |  |              |   |  | (4      | ) |  | (5       | ) |  |        |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Net cash provided by financing activities                                                                                             |  | 6,738         |   |  | 22,548  |   |  | 4,186    |   |  | 94      |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Net change in cash flows                                                                                                              |  | 465           |   |  | 2,156   |   |  | (3,005   | ) |  | (66     | )
|Effect of foreign exchange differences on cash                                                                                        |  | (57           | ) |  | 445     |   |  | 344      |   |  | 7       |  
|Cash and cash equivalents, beginning of year                                                                                          |  | 2,041         |   |  | 2,449   |   |  | 5,050    |   |  | 112     |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Cash and cash equivalents, end of year                                                                                                |  | 2,449         |   |  | 5,050   |   |  | 2,389    |   |  | 53      |  
|                                                                                                                                      |  |               |   |  |         |   |  |          |   |  |         |  
|Supplementary cash flow information:                                                                                                  |  |               |   |  |         |   |  |          |   |  |         |  
|Interest paid (net of interest capitalized)                                                                                           |  | 1,390         |   |  | 2,433   |   |  | 3,840    |   |  | 85      |  
|Income taxes paid (refunds)                                                                                                           |  | 4,219         |   |  | 3,774   |   |  | 4,982    |   |  | 111     |  
|Supplementary disclosure of non-cash investing activity:                                                                              |  |               |   |  |         |   |  |          |   |  |         |  
|Payables for capital purchases                                                                                                        |  | 2,636         |   |  | 2,450   |   |  | 909      |   |  | 20      |  



F-7



---

##### Table of Contents

Notes to Consolidated Financial Statements

1. Background

Tata Communications
Limited (Tata Communications India) and its subsidiaries (collectively Tata Communications or the Company) offer international and national voice and data transmission services, selling and leasing of bandwidth on
undersea cable systems, internet dial up and broadband services, and other value-added services comprised mainly of mobile global roaming and signaling services, transponder lease, data centers, gateway packet switching services (GPSS), telex and
telegraph and television uplinking.

The Tata group, directly and indirectly through Tata Sons Limited, Panatone Finvest Limited and Tata
Power Company Limited, and the Government of India (GOI) owned 50.03% and 26.12%, respectively of the Companys equity shares, as of March 31, 2010.

The consolidated financial statements of Tata Communications include the financial statements of Tata Communications India and its
subsidiaries, Tata Communications International Pte Ltd. (TCIPL) and its subsidiaries, Tata Communications Services (America) Inc. (TCSAI) , Tata Communications Lanka Ltd.(TCLL), VSNL SNO SPV Pte
Ltd. (SNOSPV), Tata Communications Internet Services Limited (TCISL), Tata Communications Transformation Services Limited (TCTSL), Tata Communications Banking InfraSolutions Limited (TCBIL)
(formerly Banking ATM InfraSolutions Limited) and S&A Internet Services Private Limited (SAISPL).

In India, the Company is
regulated by Department of Telecommunications (DoT), Government of India and the Telecom Regulatory Authority of India (TRAI). In Singapore and Hong Kong, the Company is regulated by the Infocomm Development Authority of Singapore and the Office of
the Telecommunications Authority of the Special Administrative Region, respectively. In North America, the Company is regulated by the Canadian Radio-television and Telecommunications Commission and Industry Canada, and the U.S. Federal
Communications Commission, under the Communications Act of 1934, as amended. In the United Kingdom, the Company is regulated by the Office of Communications. In other areas of the world, the Company is subject to various foreign regulations.

2. Significant Accounting Policies

a. Basis of presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(US GAAP).

On July 1, 2009, the Financial Accounting Standards Board (the FASB) issued the FASB Accounting
Standards Codification (the Codification). The Codification is effective for interim and annual periods ending after September 15, 2009 and is the source of authoritative US accounting and reporting standards for non-governmental
entities. The Codification is a major restructuring of accounting to simplify user access to all authoritative principles generally accepted in the United States of America (US GAAP) by providing the authoritative literature in a
topically organized structure.

b. Basis of consolidation

The Company consolidates all entities in which it has control. In addition, the Company reviews its relationships with other entities to assess if it is
the primary beneficiary of a variable interest entity. If the determination is made that it is the primary beneficiary, then that entity is consolidated. In fiscals 2009 and 2010, the Company was not the primary beneficiary of any variable interest
entity. Inter-company transactions, balances, and unrealized profits and losses on such transactions are eliminated on consolidation.

The
Company adopted ASC 810-10 (formerly SFAS 160), Non-controlling interests in Consolidated Financial Statements-an amendment to ARB No.51 (ASC Topic 810, Consolidation) on April 1, 2009. ASC 810 establishes requirements for ownership interests
in subsidiaries held by parties other than the Company (commonly referred minority interests or non-controlling interests) to be clearly identified, presented and disclosed in the consolidated balance sheet within equity (as opposed to
liability or mezzanine equity). Accordingly, non-controlling interest has been retrospectively reclassified and reported within equity as a separate component from Tata Communications Ltds shareholders equity.

c. Investments in equity method investee

Investments in entities where the Company has significant influence, generally where the Company controls between 20% and 50% of the voting stocks of such
entities, are accounted for using the equity method. Investments in equity method investees are initially recorded at cost and is adjusted in subsequent periods to reflect the Companys share of earnings or loss of the equity method investee
and any impairment. The Companys equity in net loss of equity method investees in excess of the equity ownership interest is recognized in the statement of operations as an adjustment to the loan given to such investees.



F-8



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



d. Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires the management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the years presented. Actual results could
differ from these estimates. Material estimates included in these consolidated financial statements that are susceptible to change as more information becomes available include allowances for uncollectible accounts receivable and other current
assets, useful lives of property, plant and equipment and intangible assets, asset retirement obligations, retirement benefits, impairment of goodwill and property, plant and equipment, and valuation of deferred tax assets.

e. Cash and cash equivalents

Cash and cash equivalents represents cash on hand and held with banks including demand deposits, which are unrestricted as to withdrawal and use, and
which have maturities of three months or less when purchased.

f. Investments

Investments in securities with readily determinable market values are classified as available-for-sale securities and recorded at fair value. Unrealized
gains and losses on such securities, net of applicable taxes, are reported in accumulated other comprehensive income, a separate component of shareholders equity. Realized gains and losses on sale of securities are recorded on the trade date
and the cost in respect of available-for-sale securities sold is determined on a weighted average basis.

Equity securities that do not have
readily determinable fair values are recorded at original cost. Fair values of these securities are not estimated if there are no events or changes in circumstances that may have a significant effect on the carrying amount. Other than temporary
declines in fair values below cost are reflected in earnings as realized loss.

The Company has not classified any securities as trading or
held to maturity.

g. Accounts receivable

Accounts receivable are stated at their expected realizable values, net of allowances for uncollectible receivables. Accounts receivable and payable are
disclosed on a net basis where a legal right of set-off exists. These payables and receivables are generally settled on a net basis.

h. Goodwill

Goodwill represents the premium paid over the fair values of the assets acquired and liabilities assumed in a business combination. Goodwill is assessed
for impairment on an annual basis on March 31 or earlier when events or circumstances indicate that the carrying amount of goodwill exceeds its implied fair value.

Goodwill impairment assessment is a two-step test. The first step compares the fair value of the reporting unit with its carrying amount, including
goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill
impairment test is performed to measure the impairment loss amount, if any.

The Company uses an income-based valuation approach to determine
the fair value of the reporting unit by estimating the present value of future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates, anticipated future economic and regulatory
conditions and availability of necessary technology and network infrastructure.

When required to perform the second step, the Company
compares the implied fair value of a reporting units goodwill with the carrying amount of that goodwill. If the carrying amount exceeds the implied fair value, an impairment loss equal to that excess amount is recognized, not to exceed the
goodwill carrying amount. The Company determines the implied fair value of goodwill for a reporting unit by assigning the fair value of the reporting unit to all of the assets and liabilities of that unit (including any unrecognized intangible
assets) as if the reporting unit had been acquired in a business combination. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of the goodwill. This assignment
process is only for purposes of testing goodwill impairment and the Company does not adjust the carrying amounts of the recognized assets and liabilities (other than goodwill, if appropriate) or recognize previously unrecognized intangible assets in
the consolidated balance sheet as a result of this assignment process.



F-9



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



i. Intangible assets

The Companys intangible assets include customer relationships, computer software, license and spectrum costs. Costs incurred on application
development of internal use computer software are capitalized. Capitalization is commenced when the preliminary stage is complete, funding is committed, and it is probable that the project will be completed and the software will perform the function
intended. Upgrades and enhancements that result in additional functionality are capitalized. Costs of ongoing maintenance, support and training activities are expensed as incurred. Customer relationships, computer software, license and spectrum are
amortized using the straight-line method, over the following estimated useful lives:



|                       |  |                     
|---------------------- |  | --------------------
|                       |  | Useful lives (years)
|Customer relationships |  | 1.25 to 14.5        
|Computer software      |  | 3 to 5              
|Spectrum               |  | 1.8                 
|ISP License            |  | 15                  

j. Property,
plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Cost includes purchase price,
taxes and duties, installation expenses, interest cost and other direct costs incurred till the date the asset is available for use. Interest cost incurred for constructed asset is capitalised upto the date the asset is ready for its intended use
based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings if no specific borrowing has been incurred for the asset. The cost of construction in progress is transferred to the appropriate
asset category, when construction is complete and the asset is available for use.

Property, plant and equipment includes intangible assets in
the nature of indefeasible rights of use (IRUs) for international and domestic telecommunication circuits, which the Company acquires from time to time. IRU arrangements under which the Company has the right to exclusively use a
substantial portion of the capacity in the cables for substantially all of the economic lives of the cables are capitalized as intangible assets. The Company has the obligation for costs of operations, maintenance and administration, and has the
risk of obsolescence during the contract period.

Depreciation is charged on a straight-line basis over the estimated economic useful lives of
property, plant and equipment. Land is not depreciated. The estimated useful economic lives are as follows:



|                                                   |  |                                       
|-------------------------------------------------- |  | --------------------------------------
|                                                   |  | Years                                 
|Leasehold improvements                             |  | Lesser of useful life or term of lease
|Leased properties                                  |  | Lesser of useful life or term of lease
|Buildings                                          |  | 12 to 58                              
|Plant and machinery  Telecommunication equipment: |  |                                       
|Earth stations and exchanges                       |  | 12                                    
|Cables                                             |  | 12 to 18                              
|Other network equipment                            |  | 3 to 15                               
|Office equipment                                   |  | 3 to 20                               
|Computers                                          |  | 3 to 6                                
|Motor vehicles                                     |  | 5 to 10                               
|Furniture and fixtures                             |  | 3 to 15                               

Cables under IRU arrangements are
amortized on a straight-line basis over a period of 18 years or the contracted period of right to use, whichever is lower.



F-10



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



k. Asset retirement obligation

The Companys asset retirement obligations relate to the costs associated with the removal of long-lived assets when they will be retired. The
Company records a liability at the estimated current fair value of the costs associated with the removal obligations. The fair value of a liability for asset retirement obligation is recognized if a reasonable estimate of the fair value can be made.
The liability for asset retirement cost is capitalized by increasing the carrying amount of the related long-lived asset and is depreciated over its useful life. The estimated removal liabilities are based on historical cost information, industry
factors and engineering estimates. The Company measures changes in liability for an asset retirement obligation due to passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. The
interest rate used to measure that change is the credit-adjusted risk-free rate that existed when the liability was initially measured. That accretion is recognized as an increase in the carrying amount of the liability and as an expense classified
as interest expense in the statement of operations.

l. Impairment of long-lived assets

The Company evaluates the carrying amount of its long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such
assets may not be recoverable. The Company subjects such assets to a test of recoverability based on the undiscounted cash flows from use or disposition of such assets. If the carrying amount of the asset exceeds the undiscounted cash flows, the
Company recognizes an impairment loss measured as the amount by which the carrying amount of the long-lived asset exceeds the fair value.

m. Derivative financial instruments

The Company uses derivative financial instruments such as forward exchange contracts and option contracts to mitigate the risk of changes in foreign
exchange rates. The Company is also exposed to market risks associated with changes in interest rates. The Company also uses derivative instruments such as interest rate swaps to manage its exposure to interest rate movements relating to its
variable-rate long-term debts. The counterparty to these contracts is generally a bank.

The Company formally documents all relationships
between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions.

The Company formally assesses, both at the hedges inception and on a quarterly basis, whether the derivatives that are used in hedging transactions
have been highly effective in offsetting changes in the cash flows and in the fair values of the hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not,
or has ceased to be, highly effective as a hedge, the Company discontinues hedge accounting prospectively.

Derivative instruments are recorded
at fair value on the balance sheet. The effective portion of the change in the fair value of a derivative that is designated as a cash flow hedge is recorded in accumulated other comprehensive income. When the hedged item affects earnings the gain
or loss included in accumulated other comprehensive income is reported on the same line in the consolidated statements of operations as the hedged item. In addition, both the fair value of changes excluded from the Companys effectiveness
assessments and the ineffective portion of the changes in the fair value of derivatives used as cash flow hedges are reported in interest expense line in the consolidated statements of operations.

When hedge accounting is discontinued, the derivative is adjusted for changes in fair value through earnings. For cash flow hedges, gains and losses that
were deferred in accumulated other comprehensive income as a component of shareholders equity in connection with hedged assets or liabilities will be recognized in interest expense in the same period the hedged item affects earnings.

Changes in fair value of derivative instruments that are not designated as a hedge are recorded immediately in other non operating
income/expense.

n. Revenue recognition

Revenues from voice, data and mobile roaming services are recognized based on usage when the minutes of voice calls are processed or data are transmitted,
based on contracted rates. For certain voice contracts, contracted rates may be renegotiated with retroactive effect. For previously recognized revenue, these rate amendments are recognized in the period when the new rates are established. Capacity
contracts which convey the right to use a specified capacity on an identified fiber for a stated period of time, which is substantially lower than its economic useful life are classified as operating lease arrangements. These contracts typically
range for a period between one and three years. Capacity contracts which do not convey the right to use a specified capacity on an identified fiber cable are accounted as service arrangements. Revenues from capacity contracts under operating lease
and service arrangements are recognized on a straight line basis over the period of the contracts. Amounts received in advance for any services are recorded as deferred revenue. In the event that a customer terminates an IRU prior to the expiry of
the contract and releases the Company from the obligation to provide future services, the remaining unamortized deferred revenue is recognized in the period the contract is terminated. Revenues from internet services are recognized based on usage by
subscribers/ customers.



F-11



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Revenue is recognized when collectability is reasonably assured. The Company evaluates collectability
assessing a number of factors including credit worthiness and past transaction history of customers.

o. Non-monetary
transactions

Exchange of network capacities with other telecommunication service providers are recorded as non-monetary transactions
and measured at the carrying amount of the capacities relinquished, as these exchanges are for similar productive assets used to provide telecommunication services to customers.

p. Cost recognition

Cost and expenses are recognized as incurred and are classified according to their functions as follows:

Network and transmission costs

Network and transmission costs primarily include interconnect charges paid or payable to domestic and foreign carriers for the termination of voice and
data traffic, costs related to satellite, terrestrial and sub sea leased circuits for the network backbone.

License fees

License fees are payable to the Department of Telecommunication (DoT), GOI for international long distance (ILD), national
long distance (NLD) and internet service provider (ISP) licenses and are computed in accordance with the respective license fee agreements.

Operating costs

Operating costs primarily include employee compensation and other related costs, outsourced manpower costs, repairs and maintenance, utilities,
advertising and marketing, legal and professional fees, allowances for uncollectible accounts receivables and other current assets, travel, insurance and other administrative costs.

q. Compensated absences

The Company provides for the cost of vacation earned based on the number of days of unutilized leave entitled at each balance sheet date.

r. Foreign currency

The functional currency of Tata Communications India and its Indian subsidiaries is the Indian Rupee, whereas the functional currency of TCIPL and its
subsidiaries, TCSAI and VSNL SNOSPV Pte Ltd. is the United States Dollar and that of all other subsidiaries, the currency in the country of incorporation.



F-12



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Foreign currency transactions are converted into the functional currency at the exchange rates
prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are translated into functional currency using the exchange rates prevailing on the balance sheet dates. Gains and losses on translation of foreign
currency denominated monetary assets and liabilities are included in determination of earnings.

The financial statements of foreign
subsidiaries and equity method investees are translated into Indian rupees for the purposes of consolidation as follows: income statement items are translated at the average exchange rates for the period; assets and liabilities are translated at the
exchange rates prevailing on the balance sheet dates. Unrealized translation gains and losses are reported in accumulated other comprehensive income.

s. Operating leases and service contracts

Purchase of capacity on specified cables for a stated period of time which is substantially lower than the economic lives of the cables are classified as
operating lease, and recognized as expense on a straight-line basis over the contracted period.

Capacity purchase contracts which do not
transfer the right to use any specific cable and do not identify capacity in specific cable, and under which the service provider can meet its obligation by routing the Companys traffic utilizing capacity in any of its cable depending on
availability are accounted as service contracts. Capacity expense under service contracts are recognized on a straight-line basis over the contract period.

t. Income taxes

Income tax expense comprises current income tax expense and changes in deferred tax assets and liabilities during the year.

Current income taxes:

Current income tax expense comprises taxes on income from operations in India and foreign tax jurisdictions. Income taxes payable in India is determined
in accordance with the provisions of the Indian Income Tax Act of 1961. The current income tax expense for overseas subsidiaries has been computed based on the laws applicable to each entity in the jurisdiction in which that entity operates.

Advance taxes and liabilities for current income taxes are presented in the balance sheet after off-setting advance taxes and income taxes
liabilities arising in the same tax jurisdiction pertaining to same financial year and where the Company intends to settle the asset and liability on a net basis.

Deferred income taxes:

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts of assets and
liabilities and their respective tax bases, and unutilized business loss carry forwards. Deferred tax assets and liabilities are computed separately for each taxable entity in the consolidated enterprise and for each taxable jurisdiction. Valuation
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In assessing the likelihood of realization, management considers estimates of future taxable income, the character of
income needed to realize future tax benefits, and all available evidence. The Company offsets deferred tax assets and deferred tax liabilities relating to taxes on income levied by the same governing tax authorities.

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 recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the income statement in the period of enactment of the change.

Uncertain tax positions are recognized using the more-likely-than-not threshold determined solely based on technical merits that the tax positions will
sustain upon examination. Tax positions that met recognition threshold are measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with a taxing authority that has full knowledge of all
relevant information. Interest and penalties relating to uncertain tax positions are classified as income tax expense in the statement of operations and reduced from advance income taxes which are presented in the balance sheet under non-current
assets. Interest income on repayment of income taxes is presented separately in the statement of operations as a element of non-operating income.



F-13



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



u. Earnings per share

Basic earnings per equity share have been computed by dividing net income by the weighted average number of equity shares outstanding for the period. The
Company did not have any dilutive potential equity shares outstanding in any of the periods presented.

v. Comprehensive
income

Accounting principles generally require that recognized revenues, expenses, gains and losses be included in net income.
Unrealized gains and losses on available-for-sale securities, translation adjustments arising on the consolidation of foreign subsidiaries and equity method investees, gains/ losses on derivative instruments designated as cash flow hedges, funded
status of the retirement benefit plans and net income are components of comprehensive income.

w. Employee benefit plans

A). Domestic:

(a) Defined Contribution plan

-Provident Fund

The Company makes contribution towards provident fund to a defined contribution retirement benefit plan for qualifying employees. The
provident fund is administered by the Trustees of the TATA Communications Employees Provident Fund Trust. Under this scheme, the Company is required to contribute a specified percentage of payroll cost to fund the benefits which is expensed as
incurred.

The Rules of the Companys Provident Fund administered by a trust require that if the Board of Trustees are
unable to pay interest at the rate declared for Employers Provident Fund scheme 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made by the Company. Having regard to the assets of
the Fund and the return on the investments the Company does not expect any deficiency in the foreseeable future. There has also been no such deficiency since the inception of the Fund.

(b) Defined Benefit Plans

-Gratuity

The Company makes annual contributions for Employees Gratuity scheme to a fund administered by trustees covering all eligible
employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment in an amount equivalent to 15 days salary payable for each completed year of service or part thereof in
excess of six months. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in future based on an actuarial valuation. The difference between the fair value of plan assets and
benefit obligation recognized, is reported in the balance sheet as a net asset or liability.

- Medical Benefit

The Company reimburses domiciliary and hospitalization expenses incurred by eligible and qualifying employees and their
dependent family members not exceeding certain specified limits under the TATA Communications employees medical reimbursement scheme. The scheme provides for cashless hospitalization where the claims are directly settled / reimbursed by the
Company. Tata Communications India account for the liability for medical benefits based on an actuarial valuation.

-
Pension Plan

Benefits under the pension plan covered by purchased annuity contracts are excluded from benefit obligations.
On the date of purchase, the excess of the purchase price of the participating annuity contract over the price of an equivalent nonparticipating annuity contract is recognized as an asset and is subsequently measured at fair value.



F-14



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



B) International:

The Companys defined benefit pension plans, covering certain employees, include a contributory plan, a non-contributory plan and a supplementary
employee retirement plan (SERP). The benefits under the defined benefit plans are based on various factors, such as years of service and compensation. For certain employees, the Company also offers a non-pension post-retirement benefit
plan covering retiree life insurance and health care coverage. In addition to these plans, there are defined contribution plans qualifying under Section 401(k) of the Internal Revenue Code for U.S. employees, a Registered Retirement Savings
plan (RRSP) for Canadian employees, enabling qualified employees to contribute on a tax-deferred basis, and a Group Stakeholder Pension Plan (GSPP) for UK employees, enabling qualified employees to contribute on a
tax-deferred basis.

- Actuarial gain (loss)

The corridor method is used to amortize actuarial gains and losses (such as changes in actuarial assumptions and experience gains and losses). Under the
corridor method, amortization is recorded only if the accumulated net actuarial gains or losses exceed 10% of the greater of the projected benefit obligation and the value of the plan assets. The difference between the fair value of plan assets and
benefit obligation is reported in the balance sheet as a net asset or liability.

x. Fair Value Measurements

Company measures the fair value of financial instruments in accordance with ASC 820-10 (formerly SFAS No. 157) Fair Value
Measurement and Disclosure which establishes the frame work for measuring fair value and also provides certain disclosure requirements. Primarily, AFS investment, derivative assets and liabilities are carried at fair value.

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and
consists of the following three levels:

Level 1Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3Inputs which are unobservable reflecting internal assumptions are used in pricing assets or liabilities.

y. New accounting pronouncements

ASC 350 (formerly SFAS No. 142-3)

In April 2008, the FASB issued FSP SFAS 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). This
guidance is intended to improve the consistency between the useful life of a recognized intangible asset, and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) when the underlying arrangement
includes renewal or extension of terms that would require substantial costs or result in a material modification to the asset upon renewal or extension. Companies estimating the useful life of a recognized intangible asset must now consider their
historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for SFAS 142s entity-specific
factors. FSP 142-3 is effective for the Company beginning April 1, 2009. The Company adopted this FSP prospectively for all assets acquired after April 1, 2009. The adoption of ASC 350 did not have any impact on the financial position and
results of operations of the Company.

ASC 320 &ASC 958 (formerly SFAS No.115 & SFAS 124)

In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments. The objective of an other-than-temporary impairment analysis under existing U.S. generally accepted accounting principles (GAAP) is to determine whether the holder of an investment in a debt or equity security for which
changes in fair value are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale) should recognize a loss in earnings when the investment is impaired. An investment is impaired if the fair value
of the investment is less than its amortized cost. The adoption of this ASC did not have a material impact on the Companys financial reporting and disclosures.

ASC 815 (formerly SFAS No. 161)

In
March 2008, FASB issued the disclosure requirements within ASC 815, Derivatives and Hedging (formerly SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB No. 133). ASC
815 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entitys derivative instruments and hedging activities and their effects on the entitys financial position, financial performance, and
cash flows. The disclosure requirements apply to all derivative instruments within the scope of ASC 815. The standard also applies to non-derivative hedging instruments and all hedged items designated and qualifying under ASC 815. Applicable
disclosures are included in note 25 to the financial statements.



F-15



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



ASC855 (formerly SFAS No. 165)

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165), which provides guidance on accounting for and
disclosures of events that occur after balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for fiscal years and interim periods ending after June 15, 2009. Adoption of ASC 855
did not have material impact on our financial statements.

ASC 860 ( formerly SFAS No. 166)

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfer of financial assets an amendment of FASB No 140, which
improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial
performance and cash flows; and a transferors continuing involvement in transferred financial assets. SFAS 166 is effective entitys first annual reporting period after November 15, 2009, and for interim and annual reporting periods
there after beginning. The Company is currently evaluating the impact of FAS 166 on its consolidated financial position and results of operation.

ASC 810 (formerly SFAS No. 167)

In
June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46 (R), which improves the financial reporting by enterprises involved with variable interest entities and to provide more relevant and
reliable information to users of financial statements. SFAS 167 is effective entitys first annual reporting period after November 15, 2009, and for interim and annual reporting periods there after beginning. The Company does not expect
any material effect on its financial statements on adoption of SFAS 167.

In October 2009, the FASB issued Accounting Standards Update
2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 amends the criteria for revenue recognition of
multi-deliverable arrangements and expands the required disclosures of those arrangements. ASU 2009-13 is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company
does not expect to have significant effect on its financial position and results of operations on adoption of ASC 605.

In December 2009, the
Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17).
ASU 2009-17 changes how a Company determines when an entity should be consolidated when it is significantly capitalized or is not controlled through voting or similar rights. The guidance replaces the previously required quantitative approach
with an approach that is more qualitative and requires an ongoing assessment of whether an enterprise is the primary beneficiary of a variable interest entity. ASU 2009-17 is effective as of the first annual reporting period beginning after
November 15, 2009. The Company does not expect to have significant effect on its financial position and results of operations on adoption of ASC 810.

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-02, Consolidations (Topic 810): Accounting
and Reporting for Decreases in Ownership of a Subsidiary (ASU 2010-02). ASU 2010-02 is intended to clarify the scope of the decrease in ownership provisions within FASB ASC 810-10, the Overall section of the Consolidation topic.
The ASC also expands the required disclosures about the deconsolidation of a subsidiary or derecognition of a group of assets with the scope of this section of the codification. ASU 2010-02 is effective beginning in the first interim or annual
reporting period ending on or after December 15, 2009. Adoption of ASU 2010-02 did not have material impact on financial statements.

In
April 2010, the Emerging Issues Task Force (EITF) reached a final consensus on milestone method of revenue recognition and published ASU 2010-17, Revenue Recognition  Milestone Method (Topic 605). The scope of this ASU is limited to
arrangements that include milestones relating to research or development deliverables. The consensus specifies guidance that must be met for a vendor to recognize consideration that is contingent upon achievement of a substantive milestone in its
entirety in the period in which the milestone is achieved. The guidance applies to milestones in arrangements within the scope of this consensus regardless of whether the arrangement is determined to have single or multiple deliverables or units of
accounting. The final consensus will be effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early application is permitted. Companies can apply this guidance prospectively to milestones
achieved after adoption. However, retrospective application to all prior periods is also permitted. The requirements of this ASU and its impact on Companys financial statements are being evaluated.

z. Convenience Translation

The consolidated financial statements have been expressed in Indian rupees (Rs.), the Companys reporting currency. For the convenience
of the readers in the United States of America the consolidated financial statements as of and for the year ended March 31, 2010 have been translated into US dollars at US$1.00 = Rs. 44.95 based on the certified foreign exchange rates published
by Federal Reserve Bank of New York on March 31, 2010. Such convenience translation should not be construed as a representation that the Indian rupee amounts have been or could be converted into US dollars at this or at any other rate of
exchange, or at all.



F-16



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



3. Business acquisition

In fiscal 2010, the Company acquired British Telecoms Mosaic division and all of the equity interest in S&A Internet Services Pvt. Ltd. for a
cash consideration of Rs. 155 million. The fair values of net assets acquired was Rs. 154 million (including an identifiable intangible assets of Rs. 155 million) and resulted in goodwill of Rs. 1 million. These acquisitions do
not have a material effect on the reported revenues and earnings of the Company in fiscal 2010. Supplemental proforma information has not been presented as these acquisitions are individually and in aggregate immaterial to the companys
revenues and earnings in fiscal 2010.

4. Cash and cash equivalents

Cash and cash equivalents consist of the following:



|                                                                       |  |                 |       |      |     |       |  |     |   
|---------------------------------------------------------------------- |  | --------------- | ----- | ---- | --- | ----- |  | --- | --
|                                                                       |  | As of March 31,
|                                                                       |  | 2009            |       | 2010
|                                                                       |  | (In millions)  
|Cash                                                                   |  | Rs.             | 9     |      | Rs. | 4     |  | US$ |  
|                                                                       |  |                 |      
|Cheques on hand                                                        |  |                 | 551   |      |     | 662   |  |     | 15
|                                                                       |  |                 |      
|Current account balances and deposits with banks in Indian rupees      |  |                 | 555   |      |     | 804   |  |     | 18
|                                                                       |  |                 |      
|Current account balances and deposits with banks in foreign currencies |  |                 | 3,935 |      |     | 919   |  |     | 20
|                                                                       |  |                 |       |      |     |       |  |     |   
|Total                                                                  |  | Rs.             | 5,050 |      | Rs. | 2,389 |  | US$ | 53
|                                                                       |  |                 |       |      |     |       |  |     |   

5. Short-term bank deposits

Short-term bank deposits as of March 31, 2009 includes restricted deposit of Rs. 2,631 million placed with a bank as a collateral for increase
in credit limit extended to a subsidiary. The deposit was placed pending the completion by the bank of the subsidiarys credit assessment. In fiscal 2010, the credit assessment of the subsidiary was completed and the restricted deposit was no
longer required.



F-17



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



6. Accounts receivable

Changes in the allowances for uncollectible accounts receivables are as follows:



|                                        |  |                 |       |   |      |     |        |      |  |     |        |   |  |     |     |  
|--------------------------------------- |  | --------------- | ----- | - | ---- | --- | ------ | ---- |  | --- | ------ | - |  | --- | --- | -
|                                        |  | As of March 31, |      
|                                        |  | 2008            |       |   | 2009 |     |        | 2010 | 
|                                        |  | (In millions)   |      
|Beginning balance                       |  | Rs.             | 1,937 |   |      | Rs. | 2,696  |      |  | Rs. | 3,218  |   |  | US$ | 72  |  
|Additional allowances for the year      |  |                 | 1,710 |   |      |     | 2,847  |      |  |     | 2,284  |   |  |     | 51  |  
|Recoveries                              |  |                 | (686  | ) |      |     | (1,181 | )    |  |     | (1,461 | ) |  |     | (33 | )
|Uncollectible receivables written off   |  |                 | (241  | ) |      |     | (1,298 | )    |  |     | (1,396 | ) |  |     | (31 | )
|Foreign currency translation adjustment |  |                 | (24   | ) |      |     | 154    |      |  |     | (143   | ) |  |     | (3  | )
|                                        |  |                 |       |   |      |     |        |      |  |     |        |   |  |     |     |  
|Ending balance                          |  | Rs.             | 2,696 |   |      | Rs. | 3,218  |      |  | Rs. | 2,502  |   |  | US$ | 56  |  
|                                        |  |                 |       |   |      |     |        |      |  |     |        |   |  |     |     |  

The Company has customer concentration risk, as disclosed in the table below showing the aggregated accounts receivable for
five largest customers as of March 31, 2009 and 2010, respectively. Tata Communications exposure to other customers is diversified, and no other single customer explains more than 1.8% and 2.1% of outstanding accounts receivable at
March 31, 2009 and 2010 respectively.

Balances due from major customers are as follows:



|           |  |                                   |        |  |     |  
|---------- |  | --------------------------------- | ------ |  | --- | -
|           |  | As of March 31, 2009              |       
|           |  | (In millions, except percentages) |       
|Customer F |  | Rs.                               | 925    |  | 4   | %
|Customer K |  |                                   | 826    |  | 3   | %
|Customer L |  |                                   | 737    |  | 3   | %
|Customer M |  |                                   | 704    |  | 3   | %
|Customer A |  |                                   | 652    |  | 2   | %
|Others     |  |                                   | 22,007 |  | 85  | %
|           |  |                                   |        |  |     |  
|Total      |  | Rs.                               | 25,851 |  | 100 | %
|           |  |                                   |        |  |     |  



|           |  |                                   |        |  |     |     |  |     |  
|---------- |  | --------------------------------- | ------ |  | --- | --- |  | --- | -
|           |  | As of March 31, 2010              |       
|           |  | (In millions, except percentages) |       
|Customer M |  | Rs.                               | 666    |  | US$ | 15  |  | 3   | %
|Customer N |  |                                   | 570    |  |     | 13  |  | 3   | %
|Customer O |  |                                   | 526    |  |     | 12  |  | 3   | %
|Customer P |  |                                   | 479    |  |     | 11  |  | 2   | %
|Customer G |  |                                   | 463    |  |     | 10  |  | 2   | %
|Others     |  |                                   | 17,420 |  |     | 387 |  | 87  | %
|           |  |                                   |        |  |     |     |  |     |  
|Total      |  | Rs.                               | 20,124 |  | US$ | 448 |  | 100 | %
|           |  |                                   |        |  |     |     |  |     |  



F-18



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



7. Prepaid expenses and other current assets

Prepaid expenses and other current assets include the following:



|                                                                                                                                            |  |                 |       |      |     |       |  |     |    
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ----- | ---- | --- | ----- |  | --- | ---
|                                                                                                                                            |  | As of March 31,
|                                                                                                                                            |  | 2009            |       | 2010
|                                                                                                                                            |  | (In millions)  
|Prepaid expenses                                                                                                                            |  | Rs.             | 2,120 |      | Rs. | 2,993 |  | US$ | 67 
|Advances to suppliers and contractors (net of allowances of Rs. 126 million and Rs. 118 million as of March 31,
2009 and 2010 respectively) |  |                 | 272   |      |     | 356   |  |     | 8  
|Deferred Income Taxes (See note 19)                                                                                                         |  |                 | 1,776 |      |     | 1,339 |  |     | 30 
|Recoverable Indirect tax                                                                                                                    |  |                 | 1,389 |      |     | 764   |  |     | 17 
|Operating lease and other deposits                                                                                                          |  |                 | 606   |      |     | 457   |  |     | 10 
|Interest Accrued                                                                                                                            |  |                 | 448   |      |     | 51    |  |     | 1  
|Others (net of allowances of Rs 537 million and Rs 537 million as of March 31, 2009 and 2010
repectively)                                   |  |                 | 844   |      |     | 965   |  |     | 21 
|                                                                                                                                            |  |                 |       |      |     |       |  |     |    
|Total                                                                                                                                       |  | Rs.             | 7,455 |      | Rs. | 6,925 |  | US$ | 154
|                                                                                                                                            |  |                 |       |      |     |       |  |     |    



F-19



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



8. Investments

Investments consist of the following:



|                                              |  |                 |        |      |     |       |  |     |    
|--------------------------------------------- |  | --------------- | ------ | ---- | --- | ----- |  | --- | ---
|                                              |  | As of March 31,
|                                              |  | 2009            |        | 2010
|                                              |  | (In millions)  
|Current investments                           |  |                 |        |      |     |       |  |     |    
|Investments available-for-sale, at fair value |  | Rs.             | 7,089  |      | Rs. | 4,641 |  | US$ | 103
|Non-current investments                       |  |                 |        |      |     |       |  |     |    
|Investments at cost, net                      |  |                 | 4,103  |      |     | 4,099 |  |     | 91 
|                                              |  |                 |        |      |     |       |  |     |    
|Total                                         |  | Rs.             | 11,192 |      | Rs. | 8,740 |  | US$ | 194
|                                              |  |                 |        |      |     |       |  |     |    

Information on unrealized gains and losses from investments in
available-for-sale securities is as follows:



|                                    |  |                 |       |                                |     |    |            |  |     |      
|----------------------------------- |  | --------------- | ----- | ------------------------------ | --- | -- | ---------- |  | --- | -----
|                                    |  | As of March 31,
|                                    |  | Amortized cost  |       | Gross Unrealizedgains (losses) |     |    | Fair value
|                                    |  | (In millions)  
|Available-for-sale securities       |  |                 |       |                                |     |    |            |  |     |      
|As of March 31, 2009;               |  |                 |       |                                |     |    |            |  |     |      
|Mutual Funds                        |  | Rs.             | 6,990 |                                | Rs. | 16 |            |  | Rs. | 7,006
|Equity shares                       |  |                 | 85    |                                |     | (2 | )          |  |     | 83   
|                                    |  |                 |       |                                |     |    |            |  |     |      
|Total available-for-sale securities |  | Rs.             | 7,075 |                                | Rs. | 14 |            |  | Rs. | 7,089
|                                    |  |                 |       |                                |     |    |            |  |     |      
|As of March 31, 2010;               |  |                 |       |                                |     |    |            |  |     |      
|Mutual Funds                        |  | Rs.             | 4,519 |                                | Rs. | 4  |            |  | Rs. | 4,523
|Equity shares                       |  |                 | 70    |                                |     | 48 |            |  |     | 118  
|                                    |  |                 |       |                                |     |    |            |  |     |      
|Total available-for-sale securities |  | Rs.             | 4,589 |                                | Rs. | 52 |            |  | Rs. | 4,641
|                                    |  | US$             | 102   |                                | US$ | 1  |            |  | US$ | 103  
|                                    |  |                 |       |                                |     |    |            |  |     |      

Dividends from investments were Rs. 317 million, Rs.
225 million and Rs. 2 million in fiscals 2008, 2009 and 2010 respectively.

In fiscal 2008, the proceeds and gross realized gains
from sale of available-for-sale securities were Rs 72,185 million and Rs. 145 million, respectively. On sale of these securities, unrealized gains of Rs. 46 million were reclassified from accumulated other comprehensive income /
(loss) to earnings.

In fiscal 2009, the proceeds and gross realized gains from sale of available-for-sale securities were Rs
75,733 million and Rs. 385 million, respectively. On sale of these securities, unrealized gains of Rs. 190 million were reclassified from accumulated other comprehensive income / (loss) to earnings.

In fiscal 2010, the proceeds and gross realized gains from sale of available-for-sale securities were Rs.105,504 million and Rs. 347 million,
respectively. On sale of these securities, unrealized gain of Rs. 19 million were reclassified from accumulated other comprehensive income / (loss) to earnings.

In fiscal 2009, the Company partially sold its investment in Tata Teleservices Limited (TTSL), a cost method investment, with carrying amount
of Rs. 338 million to NTT Docomo Inc. (the buyer) for a cash consideration of Rs.4,242 million and realized a gain of Rs.3,904 million, reducing its ownership interest in TTSL from 14.43% to 10.66%. In the event Company sells
any of its remaining ownership interest in TTSL within the period of 3 years, the buyer will have first right to buy shares at fair value. The Company will have the first right to acquire TTSL shares at fair value in the event of a sale of shares by
the buyer within a period of 3 years.

The Company, has an option to reacquire TTSL shares at fair value if any of the TTSLs competitor
acquires more than 10% of voting interest in buyer. The buyer has the option to sell the TTSL shares to the Company, at fair value, in the event any competitor of the buyer acquires more than 10% ownership interest in TTSL.



F-20



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The buyer has an option to acquire additional interests in TTSL from the Company, at fair value, if TTSL
does not meet certain performance targets by 2014. Additionally, the buyer has an option (referred to as the put option) to sell its interest in TTSL to the Company at the higher of fair value or 50% of the consideration paid by the buyer in the
event TTSL does not meet any of the performance targets by 2014. The Company recognized the sale and recorded a gain, as the Companys options to reacquire the shares are at fair value and therefore do not provide more than a trivial benefit to
the Company. The exercise of put option was not considered probable as of March 31, 2009, and therefore the put option does not preclude the recognition of the sale and consequently the gain in determination of earnings. The put option is in
the nature of a guarantee and fair value of guarantee at inception and as of March 31, 2010 was insignificant.

Additionally, the Company
has provided guarantee of Rs.5,485 million relating to representations and warranties in connection with the sale of Companys investment in TTSL. These representation and warranties mainly relate to the validity of the Companys title to
TTSL shares, validity of the sale and issuance of the shares by the Company and TTSL, validity of TTSLs telecommunication license. Additionally the guarantee indemnify the buyer against any loss on account of unrecorded or undisclosed
liabilities, and for any loss that the buyer may incur in relation to TTSLs contingent liabilities existing as on the date of sale agreements. The fair value of the guarantee at inception and as of March 31, 2010 was insignificant.

9. Investments in equity method investees

During fiscal years ended 2009 and 2010 Tata Communications equity had ownership interest in United Telecom Limited (UTL) of 26.66% and 43.16%
in SEPCO Communications Pty. Ltd (SEPCO). SEPCO is an investment holding company which owns 51% equity ownership interest in Neotel (Pty) Ltd. (Neotel) a company that provides basic telecommunication services in South Africa.
On January 19, 2009, the Company directly acquired an additional 27% equity ownership interest in Neotel for a cash consideration of Rs. 616 million.

Additionally, in fiscal 2010 the Company also invested Rs. 678 million (previous year Rs. 274 million) and Rs. 68 million in SEPCO group and
UTL respectively.

On December 14, 2009, the Company acquired equity shares in Bit Gravity Inc. representing an equity interest of 22.86%
which has been accounted for under the equity method accounting. As per terms of stock purchase agreement entered with Barret Lyon (Seller), the Company received an additional option to acquire same number of shares at same price. Option
is required to be exercised within six months of stock purchase agreement.



F-21



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Secured loans provided to Neotel and SEPCO carry interest at the rate of Johannesburg Inter-bank Agreed
Rate (JIBAR) plus 2% per annum and unsecured loans carry interest at the rate of JIBAR plus 2.5% per annum. In fiscal 2010, the Companys net share of losses in Neotel and SEPCO of Rs. 621 million has been allocated
against equity and preference stock investment and Rs. 2,576 million represents the share of loss in excess of equity and preference investment has been allocated against loan to Neotel and SEPCO. The loans do not have a fixed repayable term.

Summarized combined financial information of SEPCO and Neotel accounted for under the equity method is as follows:



|                                             |               |      |       |      |     |       |  |     |        |  |     |    
|-------------------------------------------- | ------------- | ---- | ----- | ---- | --- | ----- |  | --- | ------ |  | --- | ---
|                                             |               | 2008 |       | 2009 |     | 2010 
|                                             | (In millions)
|Revenues                                     |               | Rs.  | 1,300 |      | Rs. | 6,159 |  | Rs. | 11,358 |  | US$ | 253
|Telecommunication Cost                       |               |      | 775   |      |     | 3,004 |  |     | 5,744  |  |     | 128
|Loss from continuing operations before taxes |               |      | 2,447 |      |     | 5,875 |  |     | 8,988  |  |     | 200
|Net loss                                     |               |      | 1,816 |      |     | 4,421 |  |     | 6,534  |  |     | 145



|                        |  |                 |  |            |  |     |    
|----------------------- |  | --------------- |  | ---------- |  | --- | ---
|                        |  | As of March 31,
|                        |  | 2009            |  | 2010      
|                        |  | (In millions)  
|Current Assets          |  | Rs.  5,348      |  | Rs.  6,934 |  | US$ | 154
|Non Current Assets      |  | 13,115          |  | 22,287     |  |     | 496
|Current Liabilities     |  | 5,059           |  | 7,226      |  |     | 161
|Non Current Liabilities |  | 18,147          |  | 26,261     |  |     | 584



F-22



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



10. Property, plant and equipment, net



|                                                           |  |                 |         |   |      |                  |   |  |     |       |  
|---------------------------------------------------------- |  | --------------- | ------- | - | ---- | ---------------- | - |  | --- | ----- | -
|                                                           |  | As of March 31, |        
|                                                           |  | 2009            |         |   | 2010 |                 
|                                                           |  | (In millions)   |        
|Land                                                       |  | Rs.             | 832     |   |      | Rs.          761 |   |  | US$ | 17    |  
|Leasehold improvements                                     |  |                 | 987     |   |      | 975              |   |  |     | 22    |  
|Buildings                                                  |  |                 | 5,055   |   |      | 5,815            |   |  |     | 129   |  
|Plant and machinery including telecommunications equipment |  |                 | 99,368  |   |      | 117,933          |   |  |     | 2,624 |  
|Computers                                                  |  |                 | 5,665   |   |      | 6,881            |   |  |     | 153   |  
|Motor vehicles                                             |  |                 | 16      |   |      | 14               |   |  |     |      |  
|Furniture and fixtures                                     |  |                 | 1,070   |   |      | 1,386            |   |  |     | 31    |  
|                                                           |  |                 |         |   |      |                  |   |  |     |       |  
|Property, plant and equipment, at cost                     |  |                 | 112,993 |   |      | 133,765          |   |  |     | 2,976 |  
|Less: Accumulated depreciation                             |  |                 | (33,545 | ) |      | (43,625          | ) |  |     | (971  | )
|                                                           |  |                 |         |   |      |                  |   |  |     |       |  
|                                                           |  |                 | 79,448  |   |      | 90,140           |   |  |     | 2,005 |  
|Add: Construction in progress                              |  |                 | 24,265  |   |      | 15,977           |   |  |     | 356   |  
|                                                           |  |                 |         |   |      |                  |   |  |     |       |  
|Property, plant and equipment, net                         |  | Rs.             | 103,713 |   |      | Rs. 106,117      |   |  | US$ | 2,361 |  
|                                                           |  |                 |         |   |      |                  |   |  |     |       |  

As of March 31, 2009 and 2010, property, plant and equipment include IRUs as follows:



|                         |  |                 |        |   |      |     |        |   |  |     |      |  
|------------------------ |  | --------------- | ------ | - | ---- | --- | ------ | - |  | --- | ---- | -
|                         |  | As of March 31, |       
|                         |  | 2009            |        |   | 2010 |    
|                         |  | (In millions)   |       
|IRUs                     |  | Rs.             | 16,371 |   |      | Rs. | 17,589 |   |  | US$ | 391  |  
|Accumulated amortization |  |                 | (4,184 | ) |      |     | (4,943 | ) |  |     | (110 | )
|                         |  |                 |        |   |      |     |        |   |  |     |      |  
|IRUs, net                |  | Rs.             | 12,187 |   |      | Rs. | 12,646 |   |  | US$ | 281  |  
|                         |  |                 |        |   |      |     |        |   |  |     |      |  

Depreciation expense of Rs. 6,664 million, Rs 9,430 million and Rs. 12,999 million in fiscals 2008, 2009 and
2010 respectively includes IRU amortization expense of Rs. 936 million , Rs. 1,078 million and Rs. 1,195 million, respectively.

The estimated amortization for each of the five fiscal years subsequent to March 31, 2010 is as follows:



|                      |  |               |  |     |    
|--------------------- |  | ------------- |  | --- | ---
|Year ending March 31, |  | (In millions)
|2011                  |  | Rs.1,189      |  | US$ | 26 
|2012                  |  | 1,189         |  |     | 26 
|2013                  |  | 1,189         |  |     | 26 
|2014                  |  | 1,189         |  |     | 26 
|2015                  |  | 1,183         |  |     | 26 
|Thereafter            |  | 6,707         |  |     | 151

Interest expense of Rs.
412 million, Rs. 541 million and Rs. 582 million was capitalized during fiscals 2008, 2009 and 2010 respectively.



F-23



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



As of March 31, 2010, property, plant and equipment include Rs. 854 million under capital
leases. The accumulated depreciation on leased assets is Rs. 568 million.

11. Asset retirement obligations

The Companys asset retirement obligations for fiscals 2009 and 2010 relate to the costs associated with the removal of long-lived assets mainly
cables and certain other telecommunication equipment when they will be retired.

The following is a reconciliation of the asset retirement
obligations for fiscals 2009 and 2010.



|                                         |  |               |     |   |      |         |   |  |     |    |  
|---------------------------------------- |  | ------------- | --- | - | ---- | ------- | - |  | --- | -- | -
|                                         |  | 2009          |     |   | 2010 |        
|                                         |  | (In millions) |    
|Asset retirement obligations, April 1,   |  | Rs.           | 204 |   |      | Rs. 338 |   |  | US$ | 8  |  
|Liabilities incurred during the year     |  |               | 128 |   |      | 241     |   |  |     | 5  |  
|Accretion expense                        |  |               | 11  |   |      | 21      |   |  |     |   |  
|Liabilities settled during the year      |  |               | (58 | ) |      | (2      | ) |  |     |   |  
|Foreign currency translation adjustments |  |               | 53  |   |      | (52     | ) |  |     | (1 | )
|                                         |  |               |     |   |      |         |   |  |     |    |  
|Asset retirement obligations, March 31,  |  | Rs.           | 338 |   |      | Rs. 546 |   |  | US$ | 12 |  
|                                         |  |               |     |   |      |         |   |  |     |    |  



F-24



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



12. Intangible Assets



|                       |  |                       |       |                         |     |                    |  |     |      
|---------------------- |  | --------------------- | ----- | ----------------------- | --- | ------------------ |  | --- | -----
|                       |  | (In millions)        
|                       |  | Gross 
carryingamount |       | Accumulatedamortization |     | Net carryingAmount
|As of March 31, 2009:  |  |                       |       |                         |     |                    |  |     |      
|Computer software      |  | Rs.                   | 2,648 |                         | Rs. | 1,055              |  | Rs. | 1,593
|Customer relationships |  |                       | 2,958 |                         |     | 1,314              |  |     | 1,644
|ISP Licence            |  |                       |      |                         |     |                   |  |     |     
|Spectrum               |  |                       | 49    |                         |     | 49                 |  |     |     
|                       |  |                       |       |                         |     |                    |  |     |      
|                       |  | Rs.                   | 5,655 |                         | Rs. | 2,418              |  | Rs. | 3,237
|As of March 31, 2010:  |  |                       |       |                         |     |                    |  |     |      
|Computer software      |  | Rs.                   | 3,335 |                         | Rs. | 1,578              |  | Rs. | 1,757
|Customer relationships |  |                       | 2,671 |                         |     | 1,561              |  |     | 1,110
|ISP Licence            |  |                       | 3     |                         |     | 1                  |  |     | 2    
|Spectrum               |  |                       | 49    |                         |     | 49                 |  |     |     
|                       |  |                       |       |                         |     |                    |  |     |      
|                       |  | Rs.                   | 6,058 |                         | Rs. | 3,189              |  | Rs. | 2,869
|                       |  |                       |       |                         |     |                    |  |     |      
|                       |  | US$                   | 135   |                         | US$ | 71                 |  | US$ | 64   
|                       |  |                       |       |                         |     |                    |  |     |      

Computer software includes software under development of Rs.
530 million and Rs. 620 million as of March 31, 2009 and 2010 respectively.

Amortization expenses during fiscals 2008, 2009
and 2010 was Rs. 694 million, Rs. 750 million and Rs. 1,075 million respectively. The aggregate amortization expense for intangible assets is estimated to be:



|                      |  |               |  |     |   
|--------------------- |  | ------------- |  | --- | --
|Year ending March 31, |  | (In millions)
|2011                  |  | Rs.874        |  | US$ | 19
|2012                  |  | 720           |  |     | 16
|2013                  |  | 480           |  |     | 11
|2014                  |  | 69            |  |     | 2 
|2015                  |  | 18            |  |     |  
|Thereafter            |  | 88            |  |     | 2 



F-25



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



13. Goodwill

The following table presents the movement in carrying value of goodwill:



|                                                     |  |                 |   |  |           |   |  |     |     |  
|---------------------------------------------------- |  | --------------- | - |  | --------- | - |  | --- | --- | -
|                                                     |  | As of March 31, |  
|                                                     |  | 2009            |   |  | 2010      |  
|                                                     |  | (In millions)   |  
|Beginning balance                                    |  | Rs. 5,469       |   |  | Rs. 6,287 |   |  | US$ | 140 |  
|Reduction in goodwill due to adjustment of past NOLs |  | (80             | ) |  |          |   |  |     |    |  
|Additions during the year                            |  |                |   |  | 1         |   |  |     |    |  
|Foreign currency translation adjustment              |  | 898             |   |  | (479      | ) |  |     | (11 | )
|                                                     |  |                 |   |  |           |   |  |     |     |  
|Ending balance                                       |  | Rs. 6,287       |   |  | Rs. 5,809 |   |  | US$ | 129 |  
|                                                     |  |                 |   |  |           |   |  |     |     |  

The Companys goodwill is in respect of the following reporting units:



|                                         |  |                 |  |           |  |     |    
|---------------------------------------- |  | --------------- |  | --------- |  | --- | ---
|                                         |  | As of March 31,
|Reporting Unit                           |  | 2009            |  | 2010     
|                                         |  | (In millions)  
|International Voice                      |  | Rs. 4,172       |  | Rs. 3,693 |  | US$ | 82 
|Broadband internet through optical fiber |  | 629             |  | 630       |  |     | 14 
|Broadband and Dial-up internet           |  | 1,486           |  | 1,486     |  |     | 33 
|                                         |  |                 |  |           |  |     |    
|Total                                    |  | Rs. 6,287       |  | Rs. 5,809 |  | US$ | 129
|                                         |  |                 |  |           |  |     |    

The Company performed its annual impairment test as of March 31,
2010. The Company estimated the fair values of the reporting units using an income-based approach and estimated future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates,
anticipated future economic and regulatory conditions and availability of necessary technology and network infrastructure.

The estimated cash
flows were developed using internal forecasts. The discount rates used for the reporting units were based on historical market returns for similar industries of the reporting units.

As of March 31, 2010, the fair values of all the reporting units exceeded the carrying amounts and no impairment loss was recognized in fiscal 2010.

14. Other non-current assets

Other non-current assets consist of the following:



|                                       |  |                 |  |            |  |     |    
|-------------------------------------- |  | --------------- |  | ---------- |  | --- | ---
|                                       |  | As of March 31,
|                                       |  | 2009            |  | 2010      
|                                       |  | (In millions)  
|Prepaid rent                           |  | Rs. 1,922       |  | Rs. 1,896  |  | US$ | 42 
|Deferred income taxes (See note 19)    |  | 649             |  | 498        |  |     | 11 
|Prepaid pension asset                  |  | 2,363           |  | 1,399      |  |     | 31 
|Loans to equity method investee        |  | 2,965           |  | 2,228      |  |     | 50 
|License Fee paid under protest         |  | 2,950           |  | 2,899      |  |     | 64 
|Convertible Promissory Note & Warrants |  | 585             |  | 518        |  |     | 12 
|Advances to CEC                        |  | 712             |  | 630        |  |     | 14 
|Others                                 |  | 406             |  | 1,834      |  |     | 41 
|                                       |  |                 |  |            |  |     |    
|Total                                  |  | Rs. 12,552      |  | Rs. 11,902 |  | US$ | 265
|                                       |  |                 |  |            |  |     |    

The Company was in dispute with the DoTs basis of including
certain income, such as investment and interest income, income from sale of property, plant equipment, foreign exchange gains and other non-operating income, and excluding certain expense such as bandwidth and other network related costs for the
purposes of determining adjusted gross revenues to compute license fee.



F-26



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



In fiscal 2005, the Company filed a petition with the Telecom Disputes Settlement and Appellate Tribunal
(referred to as the TDSAT) to obtain TDSATs clarification on whether or not the basis of DoTs determination of license fee was appropriate. In August 2007, TDSAT concluded on the Companys Petition, that license fee was
not payable on certain income such as income from investments, sale of immovable property, plant and equipment, foreign exchange gain and other non-operating income. Additionally, the TDSAT concluded that bandwidth and other similar network costs
incurred should not be deducted from revenues in computing license fees.

The Company has challenged the TDSAT conclusion in the Supreme Court
of India, the outcome of which is currently pending. The Company, on the basis of external legal opinion, expects the Supreme Court of India to overturn the TDSAT conclusion and permit deduction of bandwidth and other similar network costs from the
revenues, retrospectively from the fiscal 2003 and onwards in order to compute license fees.

In January 2008, DoT issued additional license
fee demand for fiscals 2003, 2004 and 2005 of Rs.2,950 million for (a) additional payment of license fee (computed on the basis of the TDSAT conclusion) of Rs. 830 million, (b) compounded interest of Rs. 910 million on unpaid
license fees, (c) penalty of Rs.772 million and interest on penalty of Rs.378 million (together referred to as penalty) totaling Rs. 1,150 million, (all of (a)-(c) aggregating Rs. 2,890 million), and (d) an excess
claim of Rs.60 million by DoT which has since been adjusted against the demands in subsequent years.

In January 2008, the Company made
payment of Rs.2,950 million which has been recorded as license fee paid under protest. The additional license fee and interest totaling Rs. 1,740 million demanded by the DoT has been accrued as liability by recognizing an expense. The accrued
liability of Rs.1,740 million has not been offset against the payment of Rs.2,950 million pending outcome of the Companys challenge against the TDSAT conclusion in the Supreme Court of India, as the Company believes that its challenge will be
successful in the Supreme Court of India and deduction of bandwidth and other network related costs will be permitted for the purposes of computing license fees.

The Company has not recorded an expense and liability in respect of the DoTs claim for penalty and interest on penalty totalling Rs.1,150 million
as the Company believes that the DoTs claim will not be sustained, as in accordance with the license agreement penalty and any interest on penalty is payable to the DoT only if the shortfall in license fee paid in fiscal is more than 10% of
license fee payable. The DoT terminated the Companys exclusive right to provide international long distance service in fiscal 2002 and granted a compensation of Rs.793 million (as certified by the Government of India auditors) to the Company
(the compensation was paid by the DoT in April 2008). In accordance with the license agreement, the compensation receivable from the DoT should have been offset against the license fee, as the agreement permits the deduction of any amounts due to
the Company from the DoT from any amounts payable by the Company to the DoT. The penalty has been computed by the DoT without offsetting the compensation of Rs.793 million (US$ 16 million). Had the DoT offset the compensation due to the Company
against the additional license fee claimed from the Company, consequent to the TDSAT conclusion, the license fee paid would have been short, by lower than 10% of the license fee payable in respect of those fiscal years. The Company has made a
representation to the DoT in respect of the offset of compensation against the unpaid license fee claim which is under consideration by the DoT.

The Company had also challenged the legality of penalty provisions in the license agreement in TDSAT. TDSAT accepted the Companys position and
passed the ruling in favour of the Company striking the penalty provisions in the license agreement. Consequently Rs.1,150 million becomes refundable by DOT. DOT has disputed TDSATs order in the Supreme Court.

Convertible promissory notes and warrants.

In fiscal 2009, the Company subscribed to a convertible promissory note (referred to as the notes) and warrants issued by Bit Gravity Inc., a
nonpublic company, for a cash consideration of Rs. 585 million (US $11 million). The convertible notes carry interest at 5% per annum. The notes are convertible in Bit Gravitys common stock at the same price as that issued to other
investors 30 days before the Companys exercise of the conversion option. In the event that no common stocks have been issued 30 days before conversion, preferred stocks will be issued at fair values.

The warrants can be exercised to obtain Bit Gravitys common stock at the same price as that issued to other investors 30 days prior to the date of
Companys exercise. In the event no common stock has been issued 30 days before the exercise of warrants, preferred stocks will be issued at fair value.

Amounts advanced to CEC

In fiscal 2009
the Company through its Hong Kong subsidiary entered into an Equity Joint Venture (EJV) Agreement with the shareholders of China Enterprise Communications Limited (CEC) to acquire a 50% equity interest in CEC subject to the approvals of the
requisite government and regulatory bodies in China. An advance of Rs. 712 million (US$ 14 million) for such investment was paid in fiscal 2009. Subsequent to the balance sheet date, the Company entered into an agreement to terminate the joint
venture agreement and received the advance.



F-27



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Others include Rs. 70 million placed as collateral as per court directive till arbitration proceedings
are completed for the claims made by the creditor.

15. Accounts payable

Accounts payable consists of the following;



|                                        |  |                 |        |      |     |        |  |     |    
|--------------------------------------- |  | --------------- | ------ | ---- | --- | ------ |  | --- | ---
|                                        |  | As of March 31,
|                                        |  | 2009            |        | 2010
|                                        |  | (In millions)  
|Interconnect charges payable            |  | Rs.             | 24,817 |      | Rs. | 17,593 |  | US$ | 391
|Payables for capital and other supplies |  |                 | 9,246  |      |     | 12,530 |  |     | 279
|                                        |  |                 |        |      |     |        |  |     |    
|Total                                   |  | Rs.             | 34,063 |      | Rs. | 30,123 |  | US$ | 670
|                                        |  |                 |        |      |     |        |  |     |    

16. Short-term debt and current portion of long-term debt

Short-term debt comprises:



|                                                        |  |                 |        |   |      |     |        |   |  |     |    
|------------------------------------------------------- |  | --------------- | ------ | - | ---- | --- | ------ | - |  | --- | ---
|                                                        |  | As of March 31,
|                                                        |  | 2009            |        |   | 2010
|                                                        |  | (In millions)  
|Buyers credit                                           |  | Rs.             | 1,729  |   |      | Rs. | 890    |   |  | US$ | 20 
|Post-shipment loans                                     |  |                 | 138    |   |      |     |       |   |  |     |   
|Other bank loans*                                       |  |                 | 8,114  |   |      |     | 5,197  |   |  |     | 115
|Current portion of long-term debt                       |  |                 | 1,647  |   |      |     | 11,958 |   |  |     | 266
|                                                        |  |                 |        |   |      |     |        |   |  |     |    
|Total                                                   |  | Rs.             | 11,628 |   |      | Rs. | 18,045 |   |  | US$ | 401
|                                                        |  |                 |        |   |      |     |        |   |  |     |    
|Maximum amount of bank debt outstanding during the year |  | Rs.             | 17,814 |   |      | Rs. | 15,231 |   |  | US$ | 339
|Weighted average interest rate                          |  |                 | 9.67   | % |      |     | 7.38   | % |  |     |    
|Unutilized lines of short-term credit                   |  | Rs.             | 7,345  |   |      | Rs. | 9,559  |   |  | US$ | 213



|* | Other bank loans as of March 31, 2009 and 2010 represents loan obtained from a bank of Rs.4,000 million. The loan has a maturity period of 7
years. The loan has embedded call and put options, exercisable by the bank and the Company, respectively. These options can accelerate payment of the principal at par and any unpaid accrued interest. The options have not been
bifurcated as these are clearly and closely related to the loan, as the payoff on exercise of the option is not adjusted based on changes in any index and the loan at inception did not involve any discount or premium. Additionally, the Company does
not have contractual right to make settlement such that the lender will not recover substantially all of the loan balance and any unpaid interest. In accordance with the loan agreement, the lender does not have the right to receive any higher rate
of return that will at least double the initial rate of return and which will result in rate of return twice that of the current market return for a similar loan which involves a debtor with similar credit quality to that of the Company. The loan
balance as of March 31, 2010 was repaid subsequent to the balance sheet date.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-28



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



17. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities comprise the following:



|                                        |  |                 |        |      |     |        |  |     |    
|--------------------------------------- |  | --------------- | ------ | ---- | --- | ------ |  | --- | ---
|                                        |  | As of March 31,
|                                        |  | 2009            |        | 2010
|                                        |  | (In millions)  
|Unearned revenues                       |  | Rs.             | 4,743  |      | Rs. | 4,198  |  | US$ | 93 
|License fees                            |  |                 | 896    |      |     | 754    |  |     | 17 
|Book overdraft                          |  |                 | 1,054  |      |     | 135    |  |     | 3  
|Deposits from customers and contractors |  |                 | 4,977  |      |     | 2,359  |  |     | 52 
|Accrued payroll                         |  |                 | 2,221  |      |     | 1,738  |  |     | 39 
|Accrued expenses                        |  |                 | 4,098  |      |     | 2,274  |  |     | 51 
|Interest payable                        |  |                 | 415    |      |     | 763    |  |     | 17 
|Other current liabilities               |  |                 | 1,154  |      |     | 1,288  |  |     | 29 
|                                        |  |                 |        |      |     |        |  |     |    
|Total                                   |  | Rs.             | 19,558 |      | Rs. | 13,509 |  | US$ | 301
|                                        |  |                 |        |      |     |        |  |     |    

Other current liabilities include current deferred tax liability of Rs.
22 million and Rs. 10 million respectively for the fiscals 2009 and 2010 respectively. [See note 19]



F-29



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



18. Long-term debt, net of current portion

Long-term debt comprises the following:



|                                                                    |  |                  |  |                               |  |                 |  |           |  |     |      
|------------------------------------------------------------------- |  | ---------------- |  | ----------------------------- |  | --------------- |  | --------- |  | --- | -----
|                                                                    |  |                  |  |                               |  | As of March 31,
|                                                                    |  | Interest Rates % |  | Maturities                    |  | 2009            |  | 2010     
|                                                                    |  |                  |  |                               |  | (In millions)  
|Term loans from banks - US$                                         |  | LIBOR + 3.00%    |  | October 2010-
January 2014    |  | Rs.28,978       |  | Rs.24,754 |  | US$ | 551  
|Term loans from banks - US$ (refer note a)                          |  | LIBOR + 4.70%    |  | July 2014 -
August 2016       |  | 5,084           |  | 4,501     |  |     | 100  
|Term loans from banks - South African Rands                         |  | JIBAR + 1.26%    |  | May 2011                      |  | 560             |  | 644       |  |     | 14   
|Term loans from banks - South African Rands                         |  | JIBAR + 0.48%    |  | March 2010                    |  | 560             |  |          |  |     |     
|Term loans from banks - South African Rands (refer note b)          |  | JIBAR + 4.4%     |  | August 2012 -
August 2014     |  | 1,678           |  | 1,931     |  |     | 43   
|Term loans from banks - US$                                         |  | LIBOR + 3.75%    |  | November 2014 -
November 2016 |  |                |  | 2,251     |  |     | 50   
|Loans from finance company - US$                                    |  | 4% - 6%          |  | March 2011 -
March 2012       |  |                |  | 226       |  |     | 5    
|Non convertible debentures to financial institutions (refer note c) |  | 7.4% -11.70%     |  | November 2011 -
July 2019     |  | 12,500          |  | 19,500    |  |     | 434  
|Term loan from bank (refer note d)                                  |  | 5.95% -10.7%     |  | April 2010 -
December 2015    |  | 888             |  | 1,702     |  |     | 38   
|                                                                    |  |                  |  |                               |  |                 |  |           |  |     |      
|Total                                                               |  |                  |  |                               |  | Rs.50,248       |  | Rs.55,509 |  | US$ | 1,235
|Less: Current portion of long-term debt                             |  |                  |  |                               |  | 1,647           |  | 11,958    |  |     | 266  
|                                                                    |  |                  |  |                               |  |                 |  |           |  |     |      
|Long-term debt, net of current portion                              |  |                  |  |                               |  | Rs.48,601       |  | Rs.43,551 |  | US$ | 969  
|                                                                    |  |                  |  |                               |  |                 |  |           |  |     |      

The scheduled maturity of long-term debt as of March 31, 2010 is
set out as below:



|                                  |  |                                    |  |     |    
|--------------------------------- |  | ---------------------------------- |  | --- | ---
|                                  |  | As at March 31, 
2010(In millions)
|Due in the years ending March 31, |  |                                    |  |     |    
|2011                              |  | Rs.11,958                          |  | US$ | 266
|2012                              |  | 9,489                              |  |     | 211
|2013                              |  | 10,913                             |  |     | 243
|2014                              |  | 8,914                              |  |     | 198
|2015                              |  | 7,386                              |  |     | 164
|2016                              |  | 3,048                              |  |     | 68 
|2017                              |  | 2,251                              |  |     | 50 
|Thereafter                        |  | 1,550                              |  |     | 35 



|a. | On December 21, 2007, Tata Communications (Bermuda) Limited, a wholly owned subsidiary of Tata Communications International Pte Limited, entered into a short-term
loan agreement with a bank for principal amount of Rs. 2,542 million (US$ 50 million). The loan was obtained as a bridge for a long-term loan to fund the construction of an undersea cable in Asia. The initial maturity of the loan was
June 21, 2008 which was subsequently extended to March 30, 2009. The loan was increased to Rs. 5,084 million (US$ 100 million) on March 30, 2009 which was initially payable by May 31, 2009, and subsequently extended by the
lender upto July 29, 2009. The loan was converted into a long term loan on August 27, 2009 carrying interest at LIBOR + 470 basis points per annum.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | On January 16, 2009, VSNL SNOSPV Pte Ltd, a wholly owned subsidiary of Tata Communications Limited, entered into a short term loan agreement with a bank for a
principal amount of Rs. 1,678 million (US$ 33 million) with a variable interest rate of Johannesburg Interbank Agreed Rate (JIBAR) plus 1%. The loan was obtained as a bridge for a long- term loan to fund the acquisition of 27% ownership
interest in Neotel. The initial maturity of the short- term loan was April 16, 2009, which was extended to June 19, 2009. On August 19, 2009 the short-term loan was replaced by the long term loan carrying interest ranging from JIBAR +
4.4% to 6%.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-30



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



|c. | The non-convertible debentures to the extent of Rs. 12,500 million (US$ 278 million) are secured against the Companys property plant and equipment with
carrying amount of Rs. 16,380 million (US$ 364 million).
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d. | The term loan balance includes of Rs. 318 million (US$ 7 million) is secured by hypothecation of moveable properties with carrying amount of Rs. 1,098 million
(US$ 24 million).
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19. Income taxes

The income tax expense (benefit) consists of the following:



|                                       |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|-------------------------------------- |  | ---------------------------- | ----- | - | ---- | --- | ----- | ---- |  | --- | ------ | - |  | --- | ---- | -
|                                       |  | For the year ended March 31, |      
|                                       |  | 2008                         |       |   | 2009 |     |       | 2010 | 
|                                       |  | (In millions)                |      
|Income / (Loss) before income taxes    |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|Domestic                               |  | Rs.                          | 1,794 |   |      | Rs. | 7,481 |      |  | Rs. | 3,244  |   |  | US$ | 72   |  
|Foreign                                |  |                              | (876  | ) |      |     | 195   |      |  |     | (4,627 | ) |  |     | (103 | )
|                                       |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|                                       |  | Rs.                          | 918   |   |      | Rs. | 7,676 |      |  | Rs. | (1,383 | ) |  | US$ | (31  | )
|Current income tax expense/ (benefit): |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|Domestic                               |  | Rs.                          | 1,404 |   |      | Rs. | 1,503 |      |  | Rs. | (2,111 | ) |  |     | (47  | )
|Foreign                                |  |                              | 184   |   |      |     | 277   |      |  |     | 260    |   |  |     | 6    |  
|Deferred income tax:                   |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|Domestic                               |  |                              | (255  | ) |      |     | 684   |      |  |     | 551    |   |  |     | 12   |  
|Foreign                                |  |                              | (53   | ) |      |     | (34   | )    |  |     | 331    |   |  |     | 7    |  
|                                       |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  
|Total                                  |  | Rs.                          | 1,280 |   |      | Rs. | 2,430 |      |  | Rs. | (969   | ) |  | US$ | (22  | )
|                                       |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |      |  

Tax effects of significant timing differences on the income tax expense (benefit) are as follows:



|                                                                                                        |  |                              |      |   |      |     |      |      |  |     |     |   |  |     |    |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---- | - | ---- | --- | ---- | ---- |  | --- | --- | - |  | --- | -- | -
|                                                                                                        |  | For the year ended March 31, |     
|                                                                                                        |  | 2008                         |      |   | 2009 |     |      | 2010 | 
|                                                                                                        |  | (In millions)                |     
|Differences in carrying amounts of property, plant and equipment for accounting and income tax purposes |  | Rs.                          | 195  |   |      | Rs. | 742  |      |  | Rs. | (62 | ) |  | US$ | (1 | )
|Unearned revenues                                                                                       |  |                              | 40   |   |      |     | (219 | )    |  |     | 249 |   |  |     | 5  |  
|Allowances for uncollectible receivables and other current assets                                       |  |                              | (232 | ) |      |     | 56   |      |  |     | 303 |   |  |     | 7  |  
|Expense on account of arbitration settlement                                                            |  |                              | (293 | ) |      |     | 293  |      |  |     |    |   |  |     |   |  
|Others                                                                                                  |  |                              | (18  | ) |      |     | (222 | )    |  |     | 392 |   |  |     | 8  |  
|                                                                                                        |  |                              |      |   |      |     |      |      |  |     |     |   |  |     |    |  
|Total                                                                                                   |  | Rs.                          | (308 | ) |      | Rs. | 650  |      |  | Rs. | 882 |   |  | US$ | 19 |  
|                                                                                                        |  |                              |      |   |      |     |      |      |  |     |     |   |  |     |    |  



F-31



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The following is the reconciliation of estimated income taxes at the Indian statutory income tax rate to
income tax expense as reported:



|                                                                                     |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |       |  
|------------------------------------------------------------------------------------ |  | ---------------------------- | ----- | - | ---- | --- | ----- | ---- |  | --- | ------ | - |  | --- | ----- | -
|                                                                                     |  | For the year ended March 31, |      
|                                                                                     |  | 2008                         |       |   | 2009 |     |       | 2010 | 
|                                                                                     |  | (In millions)                |      
|Income (loss) before income tax                                                      |  | Rs.                          | 918   |   |      | Rs. | 7,676 |      |  | Rs. | (1,383 | ) |  | US$ | (31   | )
|Statutory income tax rate applicable in India                                        |  |                              | 33.99 | % |      |     | 33.99 | %    |  |     | 33.99  | % |  |     | 33.99 | %
|                                                                                     |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |       |  
|Expected income tax expense at statutory rate                                        |  |                              | 312   |   |      |     | 2,609 |      |  |     | (470   | ) |  |     | (11   | )
|Adjustments to reconcile expected income tax expense to reported income tax expense: |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |       |  
|State taxes, net of federal tax benefits                                             |  |                              | 102   |   |      |     | 24    |      |  |     |       |   |  |     |      |  
|Differences arising from different tax rates in other tax jurisdictions              |  |                              | 241   |   |      |     | 40    |      |  |     | 335    |   |  |     | 7     |  
|Changes in enacted tax rate for subsidiaries in other tax jurisdictions              |  |                              | 173   |   |      |     | 97    |      |  |     | 25     |   |  |     |      |  
|Changes in valuation allowance including losses of overseas subsidiaries             |  |                              | 1,415 |   |      |     | (38   | )    |  |     | 2,142  |   |  |     | 48    |  
|Non deductible interest expense                                                      |  |                              | 61    |   |      |     | 471   |      |  |     | (2     | ) |  |     |       |  
|Tax rate difference on gains on sale of investments                                  |  |                              | (40   | ) |      |     | (766  | )    |  |     | (1     | ) |  |     |      |  
|Uncertain tax position in respect of prior years recognised                          |  |                              |      |   |      |     |      |      |  |     | (2,800 | ) |  |     | (62   | )
|Others, net                                                                          |  |                              | (984  | ) |      |     | (7    | )    |  |     | (198   | ) |  |     | (4    | )
|                                                                                     |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |       |  
|Income tax expense (benefit)                                                         |  | Rs.                          | 1,280 |   |      | Rs. | 2,430 |      |  | Rs. | (969   | ) |  | US$ | (22   | )
|                                                                                     |  |                              |       |   |      |     |       |      |  |     |        |   |  |     |       |  

Changes in valuation allowance



|                                         |  |                              |        |   |      |     |        |   |  |     |      |  
|---------------------------------------- |  | ---------------------------- | ------ | - | ---- | --- | ------ | - |  | --- | ---- | -
|                                         |  | For the year ended March 31, |       
|                                         |  | 2009                         |        |   | 2010 |    
|                                         |  | (In millions)                |       
|Beginning Balance                        |  | Rs.                          | (6,007 | ) |      | Rs. | (7,216 | ) |  | US$ | (160 | )
|Change during the year, net              |  |                              | 38     |   |      |     | (2,142 | ) |  |     | (48  | )
|Tax benefit allocated to reduce goodwill |  |                              | 80     |   |      |     |       |   |  |     |     |  
|Effect of foreign currency translation   |  |                              | (1,327 | ) |      |     | 734    |   |  |     | 16   |  
|                                         |  |                              |        |   |      |     |        |   |  |     |      |  
|Ending Balance                           |  | Rs.                          | (7,216 | ) |      | Rs. | (8,624 | ) |  | US$ | (192 | )
|                                         |  |                              |        |   |      |     |        |   |  |     |      |  



F-32



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The deferred income tax balance sheet accounts result from temporary differences between the amount of
assets and liabilities recognized for financial reporting and tax purposes. Significant components of deferred tax assets and liabilities are as follows:



|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | --- | ------ | - |  | --- | ---- | -
|                                                                                                        |  | For the year ended March 31, |       
|                                                                                                        |  | 2009                         |        |   | 2010 |    
|                                                                                                        |  | (In millions)                |       
|Tax effect of:                                                                                          |  |                              |        |   |      |     |        |   |  |     |      |  
|Deferred tax assets:                                                                                    |  |                              |        |   |      |     |        |   |  |     |      |  
|Net operating losses carry-forwards                                                                     |  | Rs.                          | 3,944  |   |      | Rs. | 4,693  |   |  | US$ | 105  |  
|Losses of equity method investee                                                                        |  |                              | 553    |   |      |     | 1,603  |   |  |     | 36   |  
|Differences in carrying amounts of property, plant and equipment for accounting and income tax purposes |  |                              | 2,166  |   |      |     | 2,240  |   |  |     | 50   |  
|Allowances for uncollectible receivables and other current assets                                       |  |                              | 857    |   |      |     | 547    |   |  |     | 12   |  
|Unearned revenues                                                                                       |  |                              | 2,234  |   |      |     | 2,351  |   |  |     | 52   |  
|Employee severance costs                                                                                |  |                              | 32     |   |      |     | 16     |   |  |     |     |  
|National long distance license fees                                                                     |  |                              | 215    |   |      |     | 192    |   |  |     | 4    |  
|Expense on account of arbitration settlement                                                            |  |                              |       |   |      |     |       |   |  |     |     |  
|Others                                                                                                  |  |                              | 1,536  |   |      |     | 1,111  |   |  |     | 25   |  
|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|Gross deferred tax assets                                                                               |  | Rs.                          | 11,537 |   |      | Rs. | 12,753 |   |  | US$ | 284  |  
|Less : Valuation allowance                                                                              |  |                              | (7,216 | ) |      |     | (8,624 | ) |  |     | (192 | )
|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|Net deferred tax assets                                                                                 |  |                              | 4,321  |   |      |     | 4,129  |   |  |     | 92   |  
|Deferred tax liabilities:                                                                               |  |                              |        |   |      |     |        |   |  |     |      |  
|Differences in carrying amounts of property, plant and equipment for accounting and income tax purposes |  |                              | 4,873  |   |      |     | 5,078  |   |  |     | 113  |  
|Prepaid pension asset                                                                                   |  |                              | 525    |   |      |     | 430    |   |  |     | 9    |  
|Others                                                                                                  |  |                              | 150    |   |      |     | 441    |   |  |     | 10   |  
|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|Total                                                                                                   |  | Rs.                          | 5,548  |   |      | Rs. | 5,949  |   |  | US$ | 132  |  
|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|Net deferred tax liability                                                                              |  | Rs.                          | (1,227 | ) |      | Rs. | (1,820 | ) |  | US$ | (40  | )
|                                                                                                        |  |                              |        |   |      |     |        |   |  |     |      |  
|Current deferred tax asset, net                                                                         |  | Rs.                          | 1,776  |   |      | Rs. | 1,339  |   |  | US$ | 30   |  
|Non-current deferred tax asset, net                                                                     |  |                              | 649    |   |      |     | 498    |   |  |     | 11   |  
|Current deferred tax liability, net                                                                     |  |                              | 22     |   |      |     | 10     |   |  |     |     |  
|Non-current deferred tax liability, net                                                                 |  |                              | 3,630  |   |      |     | 3,647  |   |  |     | 81   |  

Deferred tax assets and liabilities
in respect of the same tax paying component and jurisdiction have been offset.

Deferred tax assets on net operating losses, which would
expire based on the year of origination are as follows:



|             |  |                                                          |  |                  |  |                               
|------------ |  | -------------------------------------------------------- |  | ---------------- |  | ------------------------------
|Jurisdiction |  | Deferred Tax Assets on Net Operating Losses in 
millions
|             |  | Rs. Fiscal 2010                                          |  | US $ Fiscal 2010 |  | Expiration of operating losses
|US           |  | 1,460                                                    |  | 32               |  | Between 2011 and 2021         
|Canada       |  | 600                                                      |  | 13               |  | Between 2012 and 2027         
|India        |  | 509                                                      |  | 11               |  | 2014 to 2017                  
|Europe       |  | 898                                                      |  | 20               |  | 4 years and higher            

Tax effect/(benefit) allocated to each
component of other comprehensive income are as follows:



|                                                        |               |                              |     |      |  |     |      |   |  |     |    |  
|------------------------------------------------------- | ------------- | ---------------------------- | --- | ---- |  | --- | ---- | - |  | --- | -- | -
|                                                        |               | For the year ended March 31, |    
|                                                        | 2009          |                              |     | 2010 | 
|                                                        | (In millions) |                             
|Unrealised (loss)/gain on available-for-sale securities |               | Rs.                          | (90 | )    |  | Rs. | 20   |   |  | US$ |   |  
|Employee benefit plans                                  |               |                              | 271 |      |  |     | (332 | ) |  |     | (7 | )
|                                                        |               |                              |     |      |  |     |      |   |  |     |    |  
|Total                                                   |               | Rs.                          | 181 |      |  | Rs. | (312 | ) |  | US$ | (7 | )
|                                                        |               |                              |     |      |  |     |      |   |  |     |    |  



F-33



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



|                                                |  |                              |       |   |      |     |        |   |  |     |     |  
|----------------------------------------------- |  | ---------------------------- | ----- | - | ---- | --- | ------ | - |  | --- | --- | -
|                                                |  | For the year ended March 31, |      
|                                                |  | 2009                         |       |   | 2010 |    
|                                                |  | (In millions)                |      
|Beginning Balance                               |  | Rs.                          | 7,681 |   |      | Rs. | 8,053  |   |  | US$ | 179 |  
|Increases related to current year tax positions |  |                              | 384   |   |      |     | 1,423  |   |  |     | 32  |  
|Decreases related to prior year tax positions   |  |                              | (12   | ) |      |     | (2,907 | ) |  |     | (65 | )
|                                                |  |                              |       |   |      |     |        |   |  |     |     |  
|Ending Balance                                  |  | Rs.                          | 8,053 |   |      | Rs. | 6,569  |   |  | US$ | 146 |  
|                                                |  |                              |       |   |      |     |        |   |  |     |     |  

The Companies total unrecognized tax benefits, if recognized, would reduce the tax liability by Rs. 6,569 million
(US$146 million) as of March 31, 2010, and thereby would affect the Companys effective tax rate.

In fiscal 2010, the Company
recognized tax benefit of Rs.2,800 million in respect of a significant tax dispute relating to fiscal 1994 as a result of a favourable decision and conclusion by the Income Tax Appellate Tribunal (referred to as ITAT) that the procedures followed by
the taxing authority in disallowing the Companys tax position was inappropriate and was not in compliance with the Indian tax administrative procedures and regulations. Although, the taxing authority has appealed to the High Court against the
ITATs decision, the Company on the basis of the ITATs decision and supported by legal opinion and judicial precedence (as set by the Supreme Court) has concluded that the Companys tax position is more likely than not be sustained
as it is unlikely that the High Court will allow the taxing authoritys appeal because ITATs basis of decision did not relate to interpretation of tax law but on determination of the fact of whether the tax administrative procedures
were appropriately followed. The High Court typically deals with interpretation of law and does not assess whether or not the facts were accurately determined.

The Companys major tax jurisdictions are India, the U.S. and Canada, though the Company also files tax returns in other foreign jurisdictions. In
India, the assessment is not yet completed for fiscal year 2006 through 2010. No tax returns have been subjected for examination in any of the other jurisdictions since these companies were acquired / formed.

For fiscal 2010, the Company has not recorded any interest and penalty on uncertain tax positions. As of March 31, 2010 the Company has an accrual of Rs.
1,661 million (US$37 million) towards interest and penalties included in advance taxes (net).

Significant changes in the amount of
unrecognized tax benefits within the next 12 months cannot be reasonably estimated as these would depend upon the outcome of the matters with various appellate authorities, which are not expected to be concluded / attain finality, within the next 12
months.

20. Other non-current liabilities

Other non-current liabilities include the following:



|                                    |  |                 |        |      |     |        |  |     |    
|----------------------------------- |  | --------------- | ------ | ---- | --- | ------ |  | --- | ---
|                                    |  | As of March 31,
|                                    |  | 2009            |        | 2010
|                                    |  | (In millions)  
|Deferred Income taxes (See note 19) |  | Rs.             | 3,630  |      | Rs. | 3,647  |  | US$ | 81 
|Unearned revenues                   |  |                 | 18,386 |      |     | 25,266 |  |     | 562
|Employee retirement benefits        |  |                 | 617    |      |     | 1,351  |  |     | 30 
|Licence fees                        |  |                 | 1,741  |      |     | 1,741  |  |     | 39 
|Others                              |  |                 | 1,592  |      |     | 2,206  |  |     | 49 
|                                    |  |                 |        |      |     |        |  |     |    
|Total                               |  | Rs.             | 25,966 |      | Rs. | 34,211 |  | US$ | 761
|                                    |  |                 |        |      |     |        |  |     |    



F-34



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



21. Accumulated other comprehensive income

The cumulative balances included in accumulated other comprehensive income are:



|                                                                                     |  |                 |      |   |      |            |   |  |     |    |  
|------------------------------------------------------------------------------------ |  | --------------- | ---- | - | ---- | ---------- | - |  | --- | -- | -
|                                                                                     |  | As of March 31, |     
|                                                                                     |  | 2009            |      |   | 2010 |           
|                                                                                     |  | (In millions)   |     
|Net unrealized gain on available-for-sale securities, net of taxes                   |  | Rs.             | 10   |   |      | Rs.     28 |   |  | US$ | 1  |  
|Foreign currency translation adjustment                                              |  |                 | (499 | ) |      | 87         |   |  |     | 2  |  
|Effective portion of net loss on derivative instrument designated as cash flow hedge |  |                 | (280 | ) |      | (260       | ) |  |     | (6 | )
|Unamortized actuarial gains and (losses)/ prior service cost (net of deferred tax)   |  |                 | 595  |   |      | (116       | ) |  |     | (3 | )
|                                                                                     |  |                 |      |   |      |            |   |  |     |    |  
|Total                                                                                |  | Rs.             | (174 | ) |      | Rs. (261   | ) |  | US$ | (6 | )
|                                                                                     |  |                 |      |   |      |            |   |  |     |    |  

22. Other non-operating income, net

Other non-operating income consists of the following:



|                                                          |  |                 |       |      |     |     |      |  |     |       |  |     |   
|--------------------------------------------------------- |  | --------------- | ----- | ---- | --- | --- | ---- |  | --- | ----- |  | --- | --
|                                                          |  | As of March 31,
|                                                          |  | 2008            |       | 2009 |     |     | 2010
|                                                          |  | (In millions)  
|Dividend Income                                           |  | Rs.             | 317   |      | Rs. | 225 |      |  | Rs. | 2     |  | US$ |  
|Foreign exchange gain (loss), net                         |  |                 | 3     |      |     | (76 | )    |  |     | 43    |  |     | 1 
|Liabilities no longer required to be settled written back |  |                 | 229   |      |     | 228 |      |  |     | 304   |  |     | 6 
|Rent received                                             |  |                 | 149   |      |     | 148 |      |  |     | 135   |  |     | 3 
|License Fee reimbursement from DoT                        |  |                 | 278   |      |     |    |      |  |     |      |  |     |  
|Liabilities written back on dispute settlement            |  |                 | 162   |      |     |    |      |  |     |      |  |     |  
|Others                                                    |  |                 | 629   |      |     | 446 |      |  |     | 681   |  |     | 15
|                                                          |  |                 |       |      |     |     |      |  |     |       |  |     |   
|Total                                                     |  | Rs.             | 1,767 |      | Rs. | 971 |      |  | Rs. | 1,165 |  | US$ | 25
|                                                          |  |                 |       |      |     |     |      |  |     |       |  |     |   

Liabilities no longer required to be settled have been written back
because of expiry of the statute of limitation period.

23. Retirement benefits

The Company in fiscals 2008, 2009 and 2010 has used March 31 as the measurement date of the funded status of the plans, which is the same date as the
year end consolidated financial statements.

(a) Tata Communications India and its wholly owned subsidiaries in India

Gratuity

In
accordance with Indian law, the Company provides for gratuity, a defined benefit plan covering all eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of
employment in an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The Company makes contributions to a fund administered
by trustees, based on an annual external actuarial valuation.

The following table sets out the status of the gratuity plans and the amounts
recognized in the Companys consolidated financial statements.



F-35



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  
|--------------------------------------------------------------------------------------------------------------- |  | --------------- | ---- | - | ---- | --- | ----- | - |  | --- | --- | -
|                                                                                                                |  | As of March 31, |     
|                                                                                                                |  | 2009            |      |   | 2010 |    
|                                                                                                                |  | (In millions)   |     
|Change in benefit obligation:                                                                                   |  |                 |      |   |      |     |       |   |  |     |     |  
|Benefit obligation, beginning of the year                                                                       |  | Rs.             | 287  |   |      | Rs. | 347   |   |  | US$ | 8   |  
|Service cost                                                                                                    |  |                 | 29   |   |      |     | 35    |   |  |     | 1   |  
|Interest cost                                                                                                   |  |                 | 21   |   |      |     | 28    |   |  |     | 1   |  
|Liabilities transferred (to)/ from other companies                                                              |  |                 | 5    |   |      |     | 2     |   |  |     |    |  
|Plan Amendment                                                                                                  |  |                 |     |   |      |     | 138   |   |  |     | 3   |  
|Actuarial (gain) loss                                                                                           |  |                 | 21   |   |      |     | (35   | ) |  |     | (1  | )
|Benefits paid                                                                                                   |  |                 | (16  | ) |      |     | (23   | ) |  |     | (1  | )
|Others                                                                                                          |  |                 |     |   |      |     | (3    | ) |  |     |    |  
|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  
|Benefit obligation, end of the year                                                                             |  | Rs.             | 347  |   |      | Rs. | 489   |   |  | US$ | 11  |  
|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  
|Change in plan assets:                                                                                          |  |                 |      |   |      |     |       |   |  |     |     |  
|Fair value of plan assets, beginning of the year                                                                |  |                 | 308  |   |      |     | 303   |   |  |     | 7   |  
|Actual return on plan assets                                                                                    |  |                 | 4    |   |      |     | 32    |   |  |     | 1   |  
|Employer contributions                                                                                          |  |                 | 2    |   |      |     | 28    |   |  |     | 1   |  
|Transfer (from) other companies                                                                                 |  |                 | 5    |   |      |     | 1     |   |  |     |    |  
|Benefits paid                                                                                                   |  |                 | (16  | ) |      |     | (23   | ) |  |     | (1  | )
|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  
|Fair value of plan assets, end of the year                                                                      |  | Rs.             | 303  |   |      | Rs. | 341   |   |  | US$ | 8   |  
|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  
|Accrued liability included in Other non-current liabilities                                                     |  | Rs.             | (44) |   |      | Rs. | (148) |   |  | US$ | (3) |  
|Actuarial (gain) loss and past service cost recognized as a component of accumulated other comprehensive income |  |                 | *41  |   |      |     | *97   |   |  |     | (2  | )
|                                                                                                                |  |                 |      |   |      |     |       |   |  |     |     |  



|* | This amount includes actuarial gain /(loss) of Rs. (20) million and Rs. 6 million on plan assets for the fiscal year 2009 and 2010 respectively.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------

Net gratuity cost in fiscals 2008, 2009 and 2010 consist of the following:



|                                  |  |                 |   |  |        |   |  |        |   |  |     |    |  
|--------------------------------- |  | --------------- | - |  | ------ | - |  | ------ | - |  | --- | -- | -
|                                  |  | As of March 31, |  
|                                  |  | 2008            |   |  | 2009   |   |  | 2010   |  
|                                  |  | (In millions)   |  
|Service cost                      |  | Rs. 26          |   |  | Rs. 29 |   |  | Rs. 35 |   |  | US$ | 1  |  
|Interest cost                     |  | 20              |   |  | 21     |   |  | 28     |   |  |     | 1  |  
|Amortization of Past Service Cost |  |                |   |  |       |   |  | 7      |   |  |     |   |  
|Expected Return on plan assets    |  | (23             | ) |  | (24    | ) |  | (26    | ) |  |     | (1 | )
|                                  |  |                 |   |  |        |   |  |        |   |  |     |    |  
|Net gratuity cost                 |  | Rs. 23          |   |  | Rs. 26 |   |  | Rs. 44 |   |  | US$ | 1  |  
|                                  |  |                 |   |  |        |   |  |        |   |  |     |    |  

The assumptions used in accounting for the gratuity plans are set out below:



|                                                             |  |                 |  |         |  |     
|------------------------------------------------------------ |  | --------------- |  | ------- |  | ----
|                                                             |  | As of March 31,
|                                                             |  | 2008            |  | 2009    |  | 2010
|                                                             |  | (% )           
|Discount rate                                                |  | 8               |  | 7.5     |  | 8.25
|Rate of increase in compensation levels of covered employees |  | 5.0-7.0         |  | 5.0-7.0 |  | 6   
|Rate of return on plan assets                                |  | 8               |  | 8       |  | 8   

Expected discount rate is based on return
on securities issued by Government of India.

The expected return on plan assets is determined considering several applicable factors mainly
the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and Tata Communications policy for plan asset management.

The estimates of the future compensation increases have been made after taking into account inflation, seniority, promotion and other relevant factors.



F-36



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Tata Communications plan asset allocation for fiscals 2009 and 2010 were as follows:



|                   |  |                       |   |  |      |  
|------------------ |  | --------------------- | - |  | ---- | -
|                   |  | Years ended March 31, |  
|                   |  | 2009                  |   |  | 2010 |  
|Category of Assets |  |                       |   |  |      |  
|Equity Securities  |  | 5                     | % |  | 10   | %
|Debt securities    |  | 95                    | % |  | 89   | %
|Others             |  |                      |   |  | 1    | %
|                   |  |                       |   |  |      |  
|Total              |  | 100                   | % |  | 100  | %
|                   |  |                       |   |  |      |  

The Companys policy and objective for plan asset management is to maximize return on plan assets to meet future
benefit payment requirements while at the same time accepting a low level of risk. The asset allocation for plan assets is determined based on investment criteria approved under the Indian Income Tax Act, 1961, and is also subject to other exposure
limitations. Tata Communications evaluates the risks, transaction costs and liquidity for potential investments. To measure plan asset performance, the Company compares actual returns for each asset category with published benchmarks.

Accumulated benefit obligation was Rs. 174 million and Rs.293 million, for fiscals 2009 and 2010, respectively.

The expected benefit payments to be paid for future service are based on the same assumptions used to measure Tata Communications gratuity obligation as
of March 31, 2010 and are as follows:



|                      |  |              
|--------------------- |  | -------------
|Year ending March 31, |  | (In millions)
|2011                  |  | Rs.  36      
|2012                  |  | 55           
|2013                  |  | 53           
|2014                  |  | 66           
|2015                  |  | 69           
|2016-2020             |  | 417          

The Company expects to contribute
Rs.215 million to gratuity fund in fiscal 2011.

Medical Benefits

The Company reimburses domiciliary and hospitalization expenses incurred by eligible and qualifying employees and their dependent family members not
exceeding certain specified limits under the Tata Communications employees medical reimbursement scheme. The scheme provides for cashless hospitalization where the claims are directly settled / reimbursed by the Company.

The following table sets out the amounts recognized in the Companys consolidated financial statements.



|                                                                                          |  |                 |   |  |         |   |  |     |    |  
|----------------------------------------------------------------------------------------- |  | --------------- | - |  | ------- | - |  | --- | -- | -
|                                                                                          |  | As of March 31, |  
|                                                                                          |  | 2009            |   |  | 2010    |  
|                                                                                          |  | (In millions)   |  
|Change in benefit obligation:                                                             |  |                 |   |  |         |   |  |     |    |  
|Benefit obligation, beginning of the year                                                 |  | Rs. 315         |   |  | Rs. 356 |   |  | US$ | 8  |  
|Service cost                                                                              |  | 40              |   |  | 45      |   |  |     | 1  |  
|Interest cost                                                                             |  | 25              |   |  | 27      |   |  |     | 1  |  
|Actuarial loss                                                                            |  | 67              |   |  | 59      |   |  |     | 1  |  
|Benefits paid                                                                             |  | (91             | ) |  | (55     | ) |  |     | (1 | )
|                                                                                          |  |                 |   |  |         |   |  |     |    |  
|Benefit obligation, end of the year (included in Other non current
liabilities)           |  | Rs. 356         |   |  | Rs. 432 |   |  | US$ | 10 |  
|Actuarial (gain) loss recognized as a component of accumulated other
comprehensive income |  | 67              |   |  | 59      |   |  |     | 1  |  



F-37



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The amounts recognized in the statement of operations for the year ended March 31, 2010:



|                     |  |                 |    |      |     |      |  |     |    |  |      |  
|-------------------- |  | --------------- | -- | ---- | --- | ---- |  | --- | -- |  | ---- | -
|                     |  | As of March 31,
|                     |  | 2008            |    | 2009 |     | 2010
|                     |  | (In millions)  
|Current Service cost |  | Rs.             | 42 |      | Rs. | 40   |  | Rs. | 45 |  | US $ | 1
|Interest cost        |  |                 | 23 |      |     | 25   |  |     | 27 |  |      | 1
|                     |  |                 |    |      |     |      |  |     |    |  |      |  
|Net Medical cost     |  | Rs.             | 65 |      | Rs. | 65   |  | Rs. | 72 |  | US $ | 2
|                     |  |                 |    |      |     |      |  |     |    |  |      |  

The health care cost trend rate has a significant effect on the amounts
reported. The assumed health care cost trend rate used to determine the accumulated post-retirement benefit obligation calculated as at March 31, 2009 and 2010 is 20 %. A one-percentage-point change in assumed health care cost trend rates would
have the following effects:



|                                             |  |                       |  |          |      |  |          |  |          |  
|-------------------------------------------- |  | --------------------- |  | -------- | ---- |  | -------- |  | -------- | -
|                                             |  | Years ended March 31, | 
|                                             |  | 2009                  |  |          | 2010 | 
|                                             |  | 1-Percentage-Point    | 
|                                             |  | (Rs. millions)        | 
|                                             |  | Increase              |  | Decrease |      |  | Increase |  | Decrease |  
|Effect on Service Cost                       |  | 4                     |  | (4       | )    |  | 4        |  | (5       | )
|Effect on Interest Cost                      |  | 3                     |  | (4       | )    |  | 3        |  | (3       | )
|Effect on post-retirement benefit obligation |  | 39                    |  | (38      | )    |  | 47       |  | (46      | )

The assumptions used in
accounting for the medical benefit plan are set out below:



|                                                             |  |      |  |     
|------------------------------------------------------------ |  | ---- |  | ----
|                                                             |  | 2009 |  | 2010
|                                                             |  | (% ) |  | (% )
|Discount rate                                                |  | 7.50 |  | 8.25
|Rate of increase in compensation levels of covered employees |  | 6.00 |  | 6.00

Accumulated benefit obligation was Rs.
356 million and Rs. 394 million for fiscal 2009 and 2010 respectively.

The expected benefit payments to be paid for future service
are based on the same assumptions used to measure Tata Communications medical obligation as on March 31, 2010 and are as follows:



|                      |  |               |    
|--------------------- |  | ------------- | ---
|Year ending March 31, |  | (In millions)
|2011                  |  | Rs.           | 69 
|2012                  |  |               | 70 
|2013                  |  |               | 72 
|2014                  |  |               | 74 
|2015                  |  |               | 82 
|2016-2020             |  |               | 287

Pension

In fiscal 2007, the Company purchased participating annuity contracts in respect of its obligation in India relating to employees transferred from the
erstwhile Overseas Communication Services (OCS). The cost of participation is recognized as an asset and has been stated at fair value of Rs. 150 million and Rs. 251 million as of March 31, 2009 and 2010. Additionally in
fiscals 2009 and 2010, the Company purchased additional annuity contracts for Rs. 144 million and Rs. 90 million in respect of increase in benefits to OCS employees resulting from cost of living increase. The cost of living increase in
pension benefits is at the discretion of Government of India. The cost of purchase of the additional annuity contracts of Rs.144 million and Rs 90 million has been recognized as expense in fiscal 2009 and 2010 respectively.



F-38



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Provident Fund

In accordance with Indian law, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in
which both the employee and employer make monthly contributions to the plan at 12% of the employees salary (basic plus cost of living allowances). These contributions are made to a fund set up as an irrevocable trust and are expensed as
incurred. The Company is generally liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return, and recognizes such contributions and
shortfall, if any, as an expense in the year incurred.

The Company contributed Rs. 115 million, Rs. 145 million and Rs.172 million
to provident fund in fiscals 2008, 2009 and 2010 respectively.

b) Overseas plans:

Defined benefit Pension Plans

The
Company has both a contributory and non-contributory defined benefit pension plans that covers certain of its employees in Canada. The Company also has an unfunded Supplemental Employee Retirement Plan (SERP) covering certain senior
executives in Canada, closed on February 13, 2006. The plan provides for defined benefit based on years of service and final average salary.

The following table summarizes changes in benefit obligations and in the plan assets for the contributory and non-contributory defined benefit pension
plans:



|                                                                                          |  |               |       |   |                  |     |       |      |  |      |      |   |  |     |        |   |  |     |       |   |  |      |    |  
|----------------------------------------------------------------------------------------- |  | ------------- | ----- | - | ---------------- | --- | ----- | ---- |  | ---- | ---- | - |  | --- | ------ | - |  | --- | ----- | - |  | ---- | -- | -
|                                                                                          |  | Pension Plans |      
|                                                                                          |  | Contributory  |       |   | Non-contributory |    
|                                                                                          |  | 2009          |       |   | 2010             |     |       | 2009 |  |      | 2010 |  
|                                                                                          |  | (In millions) |      
|Benefit obligation, beginning of period                                                   |  | Rs.           | 3,513 |   |                  | Rs. | 2,838 |      |  | US $ | 63   |   |  | Rs. | 2,975  |   |  | Rs. | 2,380 |   |  | US $ | 53 |  
|Service cost                                                                              |  |               | 20    |   |                  |     | 17    |      |  |      |     |   |  |     | 81     |   |  |     | 59    |   |  |      | 1  |  
|Interest cost                                                                             |  |               | 205   |   |                  |     | 236   |      |  |      | 5    |   |  |     | 177    |   |  |     | 200   |   |  |      | 5  |  
|Benefits paid                                                                             |  |               | (219  | ) |                  |     | (227  | )    |  |      | (5   | ) |  |     | (212   | ) |  |     | (211  | ) |  |      | (5 | )
|Actuarial (gain) loss                                                                     |  |               | (814  | ) |                  |     | 700   |      |  |      | 16   |   |  |     | (751   | ) |  |     | 775   |   |  |      | 17 |  
|Effect of foreign exchange rate changes                                                   |  |               | 133   |   |                  |     | 307   |      |  |      | 7    |   |  |     | 110    |   |  |     | 273   |   |  |      | 6  |  
|Benefit obligation, end of period                                                         |  |               | 2,838 |   |                  |     | 3,871 |      |  |      | 86   |   |  |     | 2,380  |   |  |     | 3,476 |   |  |      | 77 |  
|Fair value of plan assets, beginning of period                                            |  |               | 4,609 |   |                  |     | 4,410 |      |  |      | 98   |   |  |     | 3,218  |   |  |     | 3,171 |   |  |      | 70 |  
|Actual return on plan assets                                                              |  |               | *(149 | ) |                  |     | *416  |      |  |      | 9    |   |  |     | **(106 | ) |  |     | **304 |   |  |      | 7  |  
|Contributions                                                                             |  |               |      |   |                  |     |      |      |  |      |     |   |  |     | 154    |   |  |     | 175   |   |  |      | 4  |  
|Benefits paid                                                                             |  |               | (219  | ) |                  |     | (227  | )    |  |      | (5   | ) |  |     | (212   | ) |  |     | (212  | ) |  |      | (5 | )
|Effect of foreign exchange rate changes                                                   |  |               | 169   |   |                  |     | 411   |      |  |      | 9    |   |  |     | 117    |   |  |     | 298   |   |  |      | 7  |  
|Fair value of plan assets, end of period                                                  |  |               | 4,410 |   |                  |     | 5,010 |      |  |      | 111  |   |  |     | 3,171  |   |  |     | 3,736 |   |  |      | 83 |  
|Funded status                                                                             |  |               | 1,572 |   |                  |     | 1,139 |      |  |      | 25   |   |  |     | 791    |   |  |     | 260   |   |  |      | 6  |  
|Prepaid pension asset                                                                     |  |               | 1,572 |   |                  |     | 1,139 |      |  |      | 25   |   |  |     | 791    |   |  |     | 260   |   |  |      | 6  |  
|Actuarial (gain) loss recognized as a component of accumulated other comprehensive income |  |               | *(407 | ) |                  |     | *538  |      |  |      | 12   |   |  |     | **(462 | ) |  |     | **657 |   |  |      | 15 |  



|* | This amount includes actuarial gain /(loss) of Rs. (407) million and 162 million on plan assets for fiscal year 2009 and 2010 respectively.
|- | -------------------------------------------------------------------------------------------------------------------------------------------



|** | This amount includes actuarial gain /(loss) of Rs. (289) million and 118 million non plan assets for fiscal year 2009 and 2010 respectively.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------



F-39



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The following table summarizes changes in benefit obligations for the Companies Supplemental Employee
Retirement Plan:



|                                                                                          |  |                                      |     |   |      |     |     |  |      |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------ | --- | - | ---- | --- | --- |  | ---- | -
|                                                                                          |  | Supplemental EmployeeRetirement Plan
|                                                                                          |  | 2009                                 |     |   | 2010
|                                                                                          |  | (In. millions)                      
|Benefit obligation, beginning of period                                                   |  | Rs.                                  | 112 |   |      | Rs. | 74  |  | US $ | 2
|Service Cost                                                                              |  |                                      | 5   |   |      |     | 3   |  |      | 
|Interest Cost                                                                             |  |                                      | 7   |   |      |     | 7   |  |      | 
|Benefits paid                                                                             |  |                                      | (2  | ) |      |     |    |  |      | 
|Actuarial (gain) loss                                                                     |  |                                      | (52 | ) |      |     | 33  |  |      | 1
|Effect of foreign exchange rate changes                                                   |  |                                      | 4   |   |      |     | 15  |  |      | 
|                                                                                          |  |                                      |     |   |      |     |     |  |      |  
|Benefit obligation, end of the year (included in other non current liabilities)           |  |                                      | 74  |   |      |     | 132 |  |      | 3
|                                                                                          |  |                                      |     |   |      |     |     |  |      |  
|Actuarial (gain) loss recognized as a component of accumulated other comprehensive income |  |                                      | (52 | ) |      |     | 33  |  |      | 1

Other Post Retirement Plan

The Company also assumed a post-retirement health care and life insurance plan (OPEB) for its current retirees and future
retirees on the purchase of Teleglobe. The benefit obligation associated with this plan, included in other non-current liabilities, were approximately Rs. 73 million and Rs 78 million as of March 31, 2009 and 2010 respectively.



F-40



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The following table summarizes changes in benefit obligations for the Companies post retirement benefit
obligations:



|                                                                                          |  |                                 |   |  |        |   |  |     |  
|----------------------------------------------------------------------------------------- |  | ------------------------------- | - |  | ------ | - |  | --- | -
|                                                                                          |  | Other PostretirementPlans(OPEB)
|                                                                                          |  | 2009                            |   |  | 2010  
|                                                                                          |  | (In millions)                  
|Accumulated benefit obligation, beginning of period                                       |  | Rs. 84                          |   |  | Rs. 73 |   |  | US$ | 2
|Service Cost                                                                              |  | 1                               |   |  | 1      |   |  |     | 
|Interest Cost                                                                             |  | 5                               |   |  | 6      |   |  |     | 
|Benefits paid                                                                             |  | (10                             | ) |  | (10    | ) |  |     | 
|Actuarial (gain) loss                                                                     |  | (11                             | ) |  |       |   |  |     | 
|Effect of foreign exchange rate changes                                                   |  | 4                               |   |  | 8      |   |  |     | 
|                                                                                          |  |                                 |   |  |        |   |  |     |  
|Benefit obligation, end of the year (included in other non current liabilities)           |  | 73                              |   |  | 78     |   |  |     | 2
|                                                                                          |  |                                 |   |  |        |   |  |     |  
|Actuarial (gain) loss recognized as a component of accumulated other
comprehensive income |  | (11                             | ) |  |       |   |  |     | 

The health care
cost trend rate has a significant effect on the amounts reported. The assumed health care trend rate used to determine the accumulated post-retirement benefit obligation calculated as at March 31, 2009 and 2010 is 9.32% and 9.30% respectively.
The ultimate weighted-average health care trend is 4.44% and is expected to be attained in the year 2030. A one-percentage-point change in assumed health care cost trend rates would not have any material impact on service cost components and
interest cost components. Effect on post-retirement benefit obligation is as follows:



|                                             |  |                       |  |          |      |  |          |  |          |  
|-------------------------------------------- |  | --------------------- |  | -------- | ---- |  | -------- |  | -------- | -
|                                             |  | Years ended March 31, | 
|                                             |  | 2009                  |  |          | 2010 | 
|                                             |  | 1-Percentage-Point    | 
|                                             |  | (Rs. millions)        | 
|                                             |  | Increase              |  | Decrease |      |  | Increase |  | Decrease |  
|Effect on post-retirement benefit obligation |  | 5                     |  | (4       | )    |  | 6        |  | (5       | )



F-41



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The components of pension expense are as follows:



|                                      |  |                      |   |  |         |   |  |        |   |  |      |     |  
|------------------------------------- |  | -------------------- | - |  | ------- | - |  | ------ | - |  | ---- | --- | -
|                                      |  | Year ended March 31, |  
|                                      |  | 2008                 |   |  | 2009    |   |  | 2010   |  
|                                      |  | (In millions)        |  
|Service cost                          |  | Rs. 133              |   |  | Rs, 107 |   |  | Rs. 80 |   |  | US $ | 2   |  
|Interest cost                         |  | 372                  |   |  | 394     |   |  | 449    |   |  |      | 10  |  
|Expected Return on assets             |  | (445                 | ) |  | (441    | ) |  | (440   | ) |  |      | (10 | )
|Amortization of actuarial (gain) loss |  |                     |   |  | 1       |   |  | (38    | ) |  |      | (1  | )
|                                      |  |                      |   |  |         |   |  |        |   |  |      |     |  
|Net pension cost                      |  | Rs. 60               |   |  | Rs, 61  |   |  | Rs. 51 |   |  | US $ | 1   |  
|                                      |  |                      |   |  |         |   |  |        |   |  |      |     |  

The accumulated benefit obligation for all overseas plans at March 31, 2009 and 2010 is Rs. 5,087 million and Rs.
7,093 million respectively.

The estimated amount of experience gain that will be amortized from accumulated other comprehensive income
are not expected to be material over the next fiscal year ended March 31, 2011.

The assumptions used in accounting for the pension plans
and the other benefit plans on a weighted-average basis are as follows:



|                                           |  |                       |  |     
|------------------------------------------ |  | --------------------- |  | ----
|                                           |  | Years ended March 31,
|                                           |  | 2009                  |  | 2010
|                                           |  | (% )                  |  | (% )
|Discount rate used for benefit costs       |  | 5.75                  |  | 8.00
|Discount rate used for benefit obligations |  | 8.00                  |  | 5.75
|Expected long-term return on plan assets   |  | 5.50                  |  | 5.50
|Inflation                                  |  | 2.50                  |  | 2.25
|Rate of compensation increase              |  | 3.50                  |  | 3.25

The discount rate is based on rate of
return on the portfolio of high quality corporate bonds. The long-term rate of return on plan assets was determined as the weighted-average of expected return of each of the asset classes in the target allocation of plan assets. The expected return
of each asset class is the investment managers assessment of future returns. These expectations were compared to historical market returns to ensure that the expected return for each class was a conservative estimate. The estimates of the
future compensation increases have been made after taking into account inflation, seniority, promotion and other relevant factors.

Employee benefit plan investment components and investment strategy

The Company uses an active management style to manage short-term securities, Canadian equities and international equities. Canadian bonds, US equities and
the asset mix are managed passively. To accomplish this, the Company has entrusted this task to a professional investment manager. The management mandate defines the targeted asset allocation and the parameters for evaluating the manager
performance.

The target allocation for plan asset are 20% equity securities, 75% debt securities and 5% to all other types of investments. To
minimize the volatility of the returns, the Company selected the passive management approach for its asset mix. As a result, the market value of each asset class is rebalanced, on a quarterly basis, to the benchmark portfolio if the weighting of
either the overall fixed-income securities or that of equities weight deviates from the benchmark portfolio by more than plus / minus 3%. In such a case, the fund asset mix is brought back to the benchmark portfolio within 30 days.



F-42



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The fair value of companys pension plan assets at March 31, 2010 by asset category are as
follows



|                                      |               |                      |         |           |         |       |       |           |  |     |    
|------------------------------------- | ------------- | -------------------- | ------- | --------- | ------- | ----- | ----- | --------- |  | --- | ---
|                                      |               | As of March 31, 2010
|                                      | (In millions)
|                                      | Level 1       |                      | Level 2 |           | Level 3 |       | Total
|Cash                                  |               | Rs. 43               |         | Rs.      |         | Rs.  |       | Rs. 43    |  | US$ | 1  
|                                      |               |                      |         |           |        
|Equity Securities                     |               |                      |         |           |         |       |       |           |  |     |    
|Canadian  Mutual Fund (Equity)       |               |                     |         | 877       |         |      |       | 877       |  |     | 19 
|US  Mutual Fund (Equity)             |               |                     |         | 352       |         |      |       | 352       |  |     | 8  
|International  Mutual Fund (Equity)  |               |                     |         | 527       |         |      |       | 527       |  |     | 12 
|                                      |               |                      |         |           |        
|Fixed Income Securities               |               |                      |         |           |         |       |       |           |  |     |    
|Canadian  Long Term Bond             |               |                     |         | 6,592     |         |      |       | 6,592     |  |     | 146
|Canadian  Mutual Fund (Money Market) |               |                     |         | 355       |         |      |       | 355       |  |     | 8  
|                                      |               |                      |         |           |         |       |       |           |  |     |    
|Total                                 |               | Rs. 43               |         | Rs. 8,703 |         | Rs. - |       | Rs. 8,746 |  | US$ | 194
|                                      |               |                      |         |           |         |       |       |           |  |     |    

The following is description of the assets, information about the
valuation techniques used to measure fair value, key inputs and significant assumptions:

Level 2The fair values of mutual funds are
measured using the net asset value (NAV) provided by the administrator of the fund, and are categorized by the ability to redeem investments at the measurement date.

Cash flows

Contributions

In Canada, an actuarial valuation is required every three years by the Pension Benefits Standards Act, 1985 for the purpose of contribution.
The Company commissioned an independent actuarial consultant for both defined benefit plans.

The Company expects to contribute Rs
208 million to the non contributory pension plan in fiscal 2011, based on the valuation as at December 31, 2008.

The Company does
not expect to contribute to the contributory pension plan in fiscal 2011, based on the valuation as at December 31, 2008 which showed a surplus.

The overseas subsidiaries post-retirement benefit plans other than contributory and non-contributory pension plans were unfunded. The benefits are funded
on a pay-as-you-go basis. The Company funds on a cash basis as benefits are paid and company expects to pay Rs. 7 million in fiscal 2011.

Estimate future benefit payments for oversees plans

The following benefit payments table provides expected benefit payments based on past and future services.



|                       |  |                                                    |  |                |    |  |       |  |     |  
|---------------------- |  | -------------------------------------------------- |  | -------------- | -- |  | ----- |  | --- | -
|                       |  | Pension Benefits(Contributory
andNon Contributory) |  | Other Benefits
|                       |  | (In millions)                                     
|Years ending March 31, |  |                                                    |  |                |    |  |       |  |     |  
|2011                   |  | Rs. 453                                            |  | US$            | 10 |  | Rs. 7 |  | US$ | 
|2012                   |  | 464                                                |  |                | 10 |  | 7     |  |     | 
|2013                   |  | 477                                                |  |                | 11 |  | 7     |  |     | 
|2014                   |  | 491                                                |  |                | 11 |  | 8     |  |     | 
|2015                   |  | 506                                                |  |                | 11 |  | 7     |  |     | 
|2016-2020              |  | 2,781                                              |  |                | 62 |  | 7     |  |     | 



F-43



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Defined contribution Plans

In addition to these pension plans, there are defined contribution plans qualifying under the provisions of Section 401(k) of the Internal Revenue
Code for U.S. employees, a Registered Retirement Savings Plan (RRSP) for Canadian employees, enabling qualified employees to contribute on a tax-deferred basis and a Group Stakeholder Pension Plan (GSPP) for UK employees,
enabling qualified employees to contribute on a tax-deferred basis. Employer contributions to the 401(k) plan, RRSP and GSPP in aggregate were approximately Rs 81 million, Rs 115 million and Rs.123 million (US $ 3 million) for the year
ended March 31, 2008, 2009 and 2010 respectively.

24. Leases

As Lessee:

The Company has leased
buildings, satellite channels, office equipments, computer equipments and certain circuit capacities under operating lease arrangements. Operating lease rent expense was Rs.6,682 million, Rs.8,606 million and Rs 9,510 million in fiscals 2008,
2009 and 2010 respectively. Operating lease rentals includes Rs.4,845 million, Rs. 6,393 million and Rs. 7,032 million in fiscals 2008, 2009 and 2010 respectively under capacity purchase agreements on specified cables for a stated period
of time

The future minimum non-cancelable lease rental payments are as follows:



|                                |  |               |  |      |    
|------------------------------- |  | ------------- |  | ---- | ---
|Years ending March 31,          |  | (In millions)
|2011                            |  | Rs. 2,988     |  | US $ | 67 
|2012                            |  | 2,336         |  |      | 52 
|2013                            |  | 1,999         |  |      | 44 
|2014                            |  | 1,914         |  |      | 43 
|2015                            |  | 1,803         |  |      | 40 
|Thereafter                      |  | 5,410         |  |      | 120
|                                |  |               |  |      |    
|Total minimum lease commitments |  | Rs. 16,450    |  | US $ | 366
|                                |  |               |  |      |    

The minimum future lease payments have not been reduced by minimum
operating sublease rentals of Rs.114 million due in the future under non-cancellable subleases for certain buildings which extend until July 31, 2011. Rs 86 million and Rs.90 million in fiscal 2009 and fiscal 2010 respectively was
recognized as sublease rental income.

As Lessor:

IRUs with costs of Rs.505 million and accumulated depreciation of Rs.183 million have been leased under operating lease arrangements. Depreciation expense
of Rs. 34 million in respect of these assets has been recognized in the fiscal 2010.

Cost and accumulated depreciation of IRUs in which
only a portion of capacity has been leased under operating lease arrangements are not readily determinable as these are not allocable to the leased capacity. In fiscal 2010, lease rental income of Rs. 318 million included Rs. 278 million
relating to leases of capacities under operating lease arrangements related to such IRUs.

In respect of these IRUs, lease rental income of
Rs.221 million, Rs.291million and Rs 318 million has been recognized in earnings in fiscals 2008, 2009 and 2010 respectively.



F-44



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Future non-cancelable lease rent receipts will be recognized in earnings as follows:



|                             |  |               |  |     |   
|---------------------------- |  | ------------- |  | --- | --
|Years ending March 31,       |  | (In millions)
|2011                         |  | Rs.     310   |  | US$ | 7 
|2012                         |  | 302           |  |     | 7 
|2013                         |  | 302           |  |     | 7 
|2014                         |  | 301           |  |     | 7 
|2015                         |  | 301           |  |     | 7 
|Thereafter                   |  | 1,389         |  |     | 31
|                             |  |               |  |     |   
|Total minimum lease receipts |  | Rs. 2,905     |  | US$ | 66
|                             |  |               |  |     |   

In respect of certain lease premises under operating lease arrangement,
rental income of Rs. 18 million, Rs. nil and Rs. nil has been recognized in earnings in fiscals 2008, 2009 and 2010 respectively.

25. Fair values measurements

The
Company measures certain financial assets and liabilities at fair value on a recurring basis, including investment securities and derivatives. The fair value measurements of these derivative instruments and investment securities using the following
inputs as of March 31, 2010 and 2009:



|                                                                                      |  |                                              |  |         |  |         |  |      
|------------------------------------------------------------------------------------- |  | -------------------------------------------- |  | ------- |  | ------- |  | -----
|Particulars                                                                           |  | Fair Value measurements as at March 31, 2010
|                                                                                      |  | Level 1                                      |  | Level 2 |  | Level 3 |  | Total
|                                                                                      |  | Rs. in millions                             
|Assets                                                                                |  |                                              |  |         |  |         |  |      
|Available-for-sale investments                                                        |  | 4,641                                        |  |        |  |        |  | 4,641
|Derivatives not designated as hedging instrument                                      |  |                                              |  |         |  |         |  |      
|Foreign currency contracts included in Prepaid expenses and other current assets      |  |                                             |  | 351     |  |        |  | 351  
|Total                                                                                 |  | 4,641                                        |  | 351     |  |        |  | 4,992
|Liabilities                                                                           |  |                                              |  |         |  |         |  |      
|Derivatives not designated as hedging instrument                                      |  |                                              |  |         |  |         |  |      
|Foreign currency contracts included in Accrued expenses and other current liabilities |  |                                             |  | 4       |  |        |  | 4    
|Derivatives designated as hedging instrument                                          |  |                                              |  |         |  |         |  |      
|Interest rate contracts included in Accrued expenses and other current liabilities    |  |                                             |  | 204     |  |        |  | 204  
|Interest rate contracts included in Other non current liabilities                     |  |                                             |  | 113     |  |        |  | 113  
|Total                                                                                 |  |                                             |  | 321     |  |        |  | 321  



|                                                                                 |  |                                              |  |         |  |         |  |      
|-------------------------------------------------------------------------------- |  | -------------------------------------------- |  | ------- |  | ------- |  | -----
|Particulars                                                                      |  | Fair Value measurements as at March 31, 2009
|                                                                                 |  | Level 1                                      |  | Level 2 |  | Level 3 |  | Total
|                                                                                 |  | Rs. in millions                             
|Assets                                                                           |  |                                              |  |         |  |         |  |      
|Available-for-sale investments                                                   |  | 7,089                                        |  |        |  |        |  | 7,089
|Derivatives not designated as hedging instrument                                 |  |                                              |  |         |  |         |  |      
|Foreign currency contracts included in Prepaid expenses and other current assets |  |                                             |  | 12      |  |        |  | 12   
|Total                                                                            |  | 7,089                                        |  | 12      |  |        |  | 7,101
|Liabilities                                                                      |  |                                              |  |         |  |         |  |      
|Derivatives designated as hedging instrument                                     |  |                                              |  |         |  |         |  |      
|Interest rate contracts included in Other non current liabilities                |  |                                             |  | 521     |  |        |  | 521  
|Total                                                                            |  |                                             |  | 521     |  |        |  | 521  

Derivatives:The
fair value is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility, LIBOR rates, swap rates.



F-45



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Investments:Investments in liquid & short-term mutual funds which are classified as
available-for-sale are measured using quoted market prices at the reporting date multiplied by the quantity held.

Fair Value disclosure
of Financial Instruments:

The carrying amounts of cash and cash equivalents, short-term bank deposits, accounts receivable, other
current assets, accounts payable, accrued expenses, other current liabilities, short term borrowings, approximate their fair values due to the short- term nature of these instruments. The fair value of loan given to equity method investee cannot be
reasonably estimated.

Available-for-sale securities are carried at their fair values, which are generally based on market price quotations.
The fair values of securities without readily determinable market values cannot be reasonably estimated.

The fair value of the long term
loans of Rs. 22,719 million (US$ 505 million) is approximately Rs. 23,341 million (US$ 519 million) based on indicative market prices of similar instruments and recently negotiated terms at market rates. The term loans and NCDs totaling
Rs. 20,832 million (US$ 463 million) has an estimated fair value of approximately Rs. 21,897 million (US $ 487 million) based on the discounted future cash flows at market interest rate prevailing as of balance sheet date.

Estimation of fair value of financial instrument relies on management judgment; however there are inherent uncertainties in any estimation technique.
Therefore, for substantially all financial instruments, the fair value are not necessarily indicative of all the amounts the Company could have realized in a sale transaction as of March 31, 2010. The estimated fair value amounts as of
March 31, 2010 have been measured as of this date, and have not been re-evaluated or updated for purposes of these consolidated financial statements.

26. Derivative financial instruments

a) Interest Rate Swap Agreements (Swaps)

The Companys overall risk management objective is to mitigate the negative impact of volatile global markets on its cash flow and earnings. The
Company uses interest rate swaps to manage the market risks associated to interest rate movements relating to its variable-rate long-term debt. As on March 31, 2010 the Company had outstanding interest rate swaps to convert the variable interest
rate of its long term debt to a fixed rate. The total notional amount of swaps is Rs. 11,702 million (US $ 260 million) which is related to variable rate long term debts denominated in US$. Under the terms of the swap the Company will pay an
interest rate ranging from 2.85% to 5.52% in exchange for the variable interest rate equal to US LIBOR. These swaps expire within one year to six year from the balance sheet date. These swaps are designated as cash flow hedges.



F-46



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The differential paid or received on the above swaps are recognized as adjustments to interest expense.
The effective portion of the changes in the fair value of the swaps are deferred in accumulated other comprehensive loss and are recognized as interest expense when the hedged item affects earnings. The impact to earnings associated with hedge
ineffectiveness is recorded in interest expense. During the years ended March 31, 2008, 2009 and 2010 there was no material ineffectiveness related to the change in the fair value of the Swaps.

Derivative Impacts

The following
table summarizes the activity in accumulated other comprehensive loss related to derivatives designated as cash flow hedges during the year ended March 31, 2009 and 2010:



|                                         |  |                          |   |  |                          |   |  |     |    |  
|---------------------------------------- |  | ------------------------ | - |  | ------------------------ | - |  | --- | -- | -
|                                         |  | (In millions)            |  
|                                         |  | Year endedMarch 31, 2009 |   |  | Year endedMarch 31, 2010 |  
|Beginning Balance                        |  | Rs. 252                  |   |  | Rs. 280                  |   |  | US$ | 6  |  
|Net unrealized loss / (gains)            |  | (11                      | ) |  | (48                      | ) |  |     | (1 | )
|Realized loss reclassified into earnings |  | 39                       |   |  | 28                       |   |  |     | 1  |  
|                                         |  |                          |   |  |                          |   |  |     |    |  
|Ending balance                           |  | Rs. 280                  |   |  | Rs. 260                  |   |  | US$ | 6  |  
|                                         |  |                          |   |  |                          |   |  |     |    |  

Based on the terms of the derivative instruments designated as cash flow hedges, Rs. 189 million (US$ 4 million) of
unrealized losses currently in accumulated other comprehensive income/(loss) will be transferred into earnings during the fiscal year ending March 31, 2011.

b) Foreign Exchange Forward Contracts

The Company uses foreign currency forward and option contracts to manage the exchange risks associated with movements in United States dollars, Canadian
Dollars, Euros and other currencies. Although these contracts are effective as hedges from an economic perspective they do not qualify for hedge accounting.

Foreign exchange forward and option contracts held by the Company as of fiscals 2009 and 2010 were Rs. 4,421 million and Rs. 8,482 million
(US$ 188 million) respectively. These contracts are for a period between one and eight months.

An exchange gain (loss) of Rs.
(2) million in fiscal 2008, Rs. (521) million in fiscal 2009 and Rs. 472 million in fiscal 2010 on foreign currency forward and option contracts have been recognized in other income/expenses.

27. Segment information

The Board of
Directors and the Managing Director of the Company together as a group constitute the Chief Operating Decision Makers (CODM) and allocate resources to and assess the performance of the segments of the Company.

The Company had identified the following operating segments based on the organizational structure and for which discrete financial information including
segment results is available:



|                            |  |                                                                                                                            
|--------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------
|Wholesale Voice             |  | : Global voice services                                                                                                    
|Enterprise and Carrier Data |  | : Corporate Data Transmission services                                                                                     
|Others                      |  | : Primarily comprises national voice services, retail internet, data centers, signaling and roaming services and television

International and national voice services are managed by the Global Voice business group, corporate data transmission services and other services are
managed by the Global Data business group, retail internet services are managed by the Retail business group.



F-47



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



Segment information for fiscals 2008, 2009 and 2010 is as follows:



|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|--------------------------------------------- |  | ------------------------ | ------ | -------------------------- | --- | ------ |  | ----- | ------ |  | --- | ------ | -
|                                              |  | Year ended March 31,2008 |       
|                                              |  | WholesaleVoice           |        | Enterprise andcarrier data |     | Others |  | Total |       
|                                              |  | (In millions)            |       
|Revenues                                      |  | Rs.                      | 46,687 |                            | Rs. | 18,809 |  | Rs.   | 16,835 |  | Rs. | 82,331 |  
|Interconnection Charges                       |  |                          | 38,925 |                            |     | 2,083  |  |       | 3,076  |  |     | 44,084 |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Net revenues                                  |  | Rs.                      | 7,762  |                            | Rs. | 16,726 |  | Rs.   | 13,759 |  | Rs. | 38,247 |  
|Other network and telecommunication costs     |  |                          | 166    |                            |     | 330    |  |       | 2,137  |  |     | 2,633  |  
|Licence fees                                  |  |                          | 57     |                            |     | 419    |  |       | 263    |  |     | 739    |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Segment results                               |  | Rs.                      | 7,539  |                            | Rs. | 15,977 |  | Rs.   | 11,359 |  | Rs. | 34,875 |  
|Unallocable costs:                            |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|License fees                                  |  |                          |        |                            |     |        |  |       |        |  |     | 109    |  
|Depreciation and amortistaion                 |  |                          |        |                            |     |        |  |       |        |  |     | 7,358  |  
|Other operating costs                         |  |                          |        |                            |     |        |  |       |        |  |     | 27,200 |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Operating income                              |  |                          |        |                            |     |        |  |       |        |  |     | 208    |  
|Non-operating income, net                     |  |                          |        |                            |     |        |  |       |        |  |     | 710    |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Income before income tax                      |  |                          |        |                            |     |        |  |       |        |  |     | 918    |  
|Income tax expense                            |  |                          |        |                            |     |        |  |       |        |  |     | (1,280 | )
|Dividend tax                                  |  |                          |        |                            |     |        |  |       |        |  |     | (218   | )
|Equity in net loss of equity method investees |  |                          |        |                            |     |        |  |       |        |  |     | (393   | )
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Net income (loss)                             |  |                          |        |                            |     |        |  |       |        |  | Rs. | (973   | )
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  



|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|--------------------------------------------- |  | ------------------------ | ------ | -------------------------- | --- | ------ |  | ----- | ------ |  | --- | ------ | -
|                                              |  | Year ended March 31,2009 |       
|                                              |  | WholesaleVoice           |        | Enterprise andcarrier data |     | Others |  | Total |       
|                                              |  | (In millions)            |       
|Revenues                                      |  | Rs.                      | 50,207 |                            | Rs. | 25,184 |  | Rs.   | 21,904 |  | Rs. | 97,295 |  
|Interconnection Charges                       |  |                          | 41,231 |                            |     | 2,014  |  |       | 5,630  |  |     | 48,875 |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Net revenues                                  |  | Rs.                      | 8,976  |                            | Rs. | 23,170 |  | Rs.   | 16,274 |  | Rs. | 48,420 |  
|Other network and telecommunication costs     |  |                          | 120    |                            |     | 207    |  |       | 1,999  |  |     | 2,326  |  
|Licence fees                                  |  |                          | 85     |                            |     | 463    |  |       | 315    |  |     | 863    |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Segment results                               |  | Rs.                      | 8,771  |                            | Rs. | 22,500 |  | Rs.   | 13,960 |  | Rs. | 45,231 |  
|Unallocable costs:                            |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Depreciation and amortistaion                 |  |                          |        |                            |     |        |  |       |        |  |     | 10,180 |  
|Other operating costs                         |  |                          |        |                            |     |        |  |       |        |  |     | 30,394 |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Operating income                              |  |                          |        |                            |     |        |  |       |        |  |     | 4,657  |  
|Non operating income, net                     |  |                          |        |                            |     |        |  |       |        |  |     | 3,019  |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Income before income tax                      |  |                          |        |                            |     |        |  |       |        |  |     | 7,676  |  
|Income tax expense                            |  |                          |        |                            |     |        |  |       |        |  |     | (2,430 | )
|Dividend tax                                  |  |                          |        |                            |     |        |  |       |        |  |     | (218   | )
|Equity in net loss of equity method investees |  |                          |        |                            |     |        |  |       |        |  |     | (1,120 | )
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  
|Net income (loss)                             |  |                          |        |                            |     |        |  |       |        |  | Rs. | 3,908  |  
|                                              |  |                          |        |                            |     |        |  |       |        |  |     |        |  



F-48



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|--------------------------------------------- |  | ------------------------ |  | -------------------------- |  | --------- |  | ---------- | - |  | --- | ----- | -
|                                              |  | Year ended March 31,2010 | 
|                                              |  | WholesaleVoice           |  | Enterprise andCarrier Data |  | Others    |  | Total      |  
|                                              |  | (In millions)            | 
|Revenues                                      |  | Rs.56,855                |  | Rs.25,325                  |  | Rs.23,900 |  | Rs.106,080 |   |  | US$ | 2,360 |  
|Interconnection Charges                       |  | 51,216                   |  | 2,210                      |  | 5,539     |  | 58,965     |   |  |     | 1,312 |  
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Net revenues                                  |  | Rs.5,639                 |  | Rs.23,115                  |  | Rs.18,361 |  | Rs.47,115  |   |  | US$ | 1,048 |  
|Other network and telecommunication costs     |  | 127                      |  | 194                        |  | 2,166     |  | 2,487      |   |  |     | 55    |  
|Licence fees                                  |  | 64                       |  | 441                        |  | 289       |  | 794        |   |  |     | 18    |  
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Segment results                               |  | Rs.5,448                 |  | Rs.22,480                  |  | Rs.15,906 |  | Rs.43,834  |   |  | US$ | 975   |  
|Unallocable costs:                            |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Depreciation and amortistaion                 |  |                          |  |                            |  |           |  | 14,074     |   |  |     | 313   |  
|Other operating costs                         |  |                          |  |                            |  |           |  | 31,323     |   |  |     | 697   |  
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Operating income / (loss)                     |  |                          |  |                            |  |           |  | (1,563     | ) |  |     | (35   | )
|Non-operating income, net                     |  |                          |  |                            |  |           |  | 180        |   |  |     | 4     |  
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Income before income tax                      |  |                          |  |                            |  |           |  | (1,383     | ) |  |     | (31   | )
|Income tax (expense) / benefit                |  |                          |  |                            |  |           |  | 969        |   |  |     | 22    |  
|Dividend tax                                  |  |                          |  |                            |  |           |  | (218       | ) |  |     | (5    | )
|Equity in net loss of equity method investees |  |                          |  |                            |  |           |  | (3,192     | ) |  |     | (71   | )
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  
|Net income / (loss)                           |  |                          |  |                            |  |           |  | Rs.(3,824  | ) |  | US$ | (85   | )
|                                              |  |                          |  |                            |  |           |  |            |   |  |     |       |  

Revenues and interconnect charges are directly attributable to the segments. Space segment utilization charges, rent of
landlines and other network and transmission costs are allocated based on utilization of satellite and landlines. License fee for international voice and corporate data transmission services have been allocated based on net revenues from these
services.

Telecommunication services are provided utilizing the Companys property plant and equipments which do not generally make a
distinction between the types of service. As a result, assets and expenses relating to those assets are not allocated to segments.

Revenues
have been allocated to countries based on location of the customers and are as follows:



|                         |  |                      |  |                      |  |                      |  |     |      
|------------------------ |  | -------------------- |  | -------------------- |  | -------------------- |  | --- | -----
|                         |  | As of March 31, 2008 |  | As of March 31, 2009 |  | As of March 31, 2010
|                         |  | (In millions)       
|India                    |  | Rs.35,448            |  | Rs.31,984            |  | Rs.     28,847       |  | US$ | 642  
|                         |  |                      |  |                     
|United States Of America |  | 17,817               |  | 16,683               |  | 19,159               |  |     | 426  
|                         |  |                      |  |                     
|United Kingdom           |  | 5,306                |  | 6,791                |  | 11,637               |  |     | 259  
|                         |  |                      |  |                     
|Canada                   |  | 4,349                |  | 3,976                |  | 4,274                |  |     | 95   
|                         |  |                      |  |                     
|Rest of the world        |  | 19,411               |  | 37,861               |  | 42,163               |  |     | 938  
|                         |  |                      |  |                      |  |                      |  |     |      
|                         |  |                      |  |                     
|Total                    |  | Rs.82,331            |  | Rs.97,295            |  | Rs.106,080           |  | US$ | 2,360
|                         |  |                      |  |                      |  |                      |  |     |      

No single customer contributed more than 10% of the revenues of the
Company.

Substantially all of Tata Communications Indias long-lived assets, other than undersea cables are located in India. The
overseas subsidiaries own approximately 49% of the Companys property, plant and equipment.



F-49



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



28. Related party transactions

The related parties of the Company are Panatone Finvest Limited and the Government of India (Principal Owners), Tata Sons Limited (Beneficial Owner),
subsidiaries of Tata Sons Limited, equity method investees and the Companys principal officers and directors. The Company routinely enters into transactions with some of its related parties, such as providing and receiving telecommunication
services, incurring network and transmission costs, and paying license fees. Transactions and balances with its own subsidiaries are eliminated on consolidation.



F-50



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The following table summarizes the related party transactions and balances included in the financial
statements:



|                                                                                                                                                                  |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | ---------------- |  | ----------------------- |  | ----- |  | ---- |  | ---- |  | ---- |  | ---- |  | ----- |  | ----- |  | ----- |  | ----- |  | -----
|                                                                                                                                                                  |  | Years ended March 31,           
|                                                                                                                                                                  |  | Beneficial Owner andSubsidiaries |  | Principal Owners |  | Equity 
MethodInvestees |  | Total
|Nature of transactions                                                                                                                                            |  | 2008                             |  | 2009             |  | 2010                    |  | 2008  |  | 2009 |  | 2010 |  | 2008 |  | 2009 |  | 2010  |  | 2008  |  | 2009  |  | 2010  |  | 2010 
|                                                                                                                                                                  |  | (In millions)                   
|                                                                                                                                                                  |  | Rs.                              |  | Rs.              |  | Rs.                     |  | Rs.   |  | Rs.  |  | Rs.  |  | Rs.  |  | Rs.  |  | Rs.   |  | Rs.   |  | Rs.   |  | Rs.   |  | (US$)
|Revenues from telecommunication services:-                                                                                                                        |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|Wholesale Voice (including Rs 1,335 million, Rs 1,718 million and Rs 670 million for fiscals 2008, 2009 and 2010 respectively from Tata
Teleservices Ltd)         |  | 1,632                            |  | 1,988            |  | 1,029                   |  |      |  |     |  |     |  | 239  |  | 227  |  | 509   |  | 1,871 |  | 2,215 |  | 1,538 |  | 34   
|Enterprise and Carrier Data (including Rs 250 million, Rs.358 million and Rs 317 million for fiscals 2008, 2009 and 2010 respectively from Tata
Teleservices Ltd) |  | 788                              |  | 1,023            |  | 1,319                   |  |      |  |     |  |     |  | 50   |  | 29   |  | 166   |  | 838   |  | 1,052 |  | 1,485 |  | 33   
|Others (including Rs 1,678 million, Rs.1,360 million and Rs 612 million for fiscals 2008, 2009 and 2010 respectively from Tata Teleservices Ltd)                  |  | 2,135                            |  | 2,080            |  | 1,422                   |  |      |  |     |  |     |  | 270  |  | 499  |  | 225   |  | 2,405 |  | 2,579 |  | 1,647 |  | 37   
|                                                                                                                                                                  |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|Total                                                                                                                                                             |  | 4,555                            |  | 5,091            |  | 3,770                   |  |      |  |     |  |     |  | 559  |  | 755  |  | 900   |  | 5,114 |  | 5,846 |  | 4,670 |  | 104  
|                                                                                                                                                                  |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|Capacity contract provided                                                                                                                                        |  | 162                              |  | 4                |  |                        |  |      |  |     |  |     |  |     |  |     |  |      |  | 162   |  | 4     |  |      |  |     
|Interest income                                                                                                                                                   |  |                                 |  |                 |  |                        |  |      |  |     |  |     |  | 40   |  | 188  |  | 552   |  | 40    |  | 188   |  | 552   |  | 12   
|Network & transmission costs :-                                                                                                                                   |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|Wholesale Voice (including Rs 94 million, Rs 102 million and Rs 183 million for fiscals 2008, 2009 and 2010 respectively from Tata Teleservices Ltd)              |  | 127                              |  | 155              |  | 240                     |  |      |  |     |  |     |  | 342  |  | 566  |  | 1,051 |  | 469   |  | 721   |  | 1,291 |  | 29   
|Enterprise and Carrier Data (including Rs 11 million, Rs 5 million and Rs 97 million for fiscals 2008, 2009 and 2010 respectively from Tata
Teleservices Ltd)     |  | 20                               |  | 10               |  | 148                     |  |      |  |     |  |     |  |     |  |     |  | 333   |  | 20    |  | 10    |  | 481   |  | 11   
|Others (including Rs 728 million, Rs 254 million and Rs 324 million for fiscals 2008, 2009 and 2010 respectively from Tata Teleservices
Ltd.)                     |  | 1,121                            |  | 713              |  | 862                     |  |      |  |     |  |     |  |     |  |     |  |      |  | 1,121 |  | 713   |  | 862   |  | 19   
|                                                                                                                                                                  |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      
|Total                                                                                                                                                             |  | 1,268                            |  | 878              |  | 1,250                   |  |      |  |     |  |     |  | 342  |  | 566  |  | 1,384 |  | 1,610 |  | 1,444 |  | 2,634 |  | 59   
|                                                                                                                                                                  |  |                                  |  |                  |  |                         |  |       |  |      |  |      |  |      |  |      |  |       |  |       |  |       |  |       |  |      



F-51



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



|                                         |  |                                  |  |                  |  |                        |  |       |  |      |  |      |  |      |  |       |  |       |  |      |  |       |  |       |  |      
|---------------------------------------- |  | -------------------------------- |  | ---------------- |  | ---------------------- |  | ----- |  | ---- |  | ---- |  | ---- |  | ----- |  | ----- |  | ---- |  | ----- |  | ----- |  | -----
|                                         |  | Years ended March 31,           
|                                         |  | Beneficial Owner andSubsidiaries |  | Principal Owners |  | Equity
MethodInvestees |  | Total
|Nature of transactions                   |  | 2008                             |  | 2009             |  | 2010                   |  | 2008  |  | 2009 |  | 2010 |  | 2008 |  | 2009  |  | 2010  |  | 2008 |  | 2009  |  | 2010  |  | 2010 
|                                         |  | (In millions)                   
|                                         |  | Rs.                              |  | Rs.              |  | Rs.                    |  | Rs.   |  | Rs.  |  | Rs.  |  | Rs.  |  | Rs.   |  | Rs.   |  | Rs.  |  | Rs.   |  | Rs.   |  | (US$)
|License fees                             |  |                                 |  |                 |  |                       |  | 848   |  | 863  |  | 794  |  |     |  |      |  |      |  | 848  |  | 863   |  | 794   |  | 18   
|Loans given                              |  |                                 |  |                 |  |                       |  |      |  |     |  |     |  | 219  |  | 2,862 |  | 1,284 |  | 219  |  | 2,862 |  | 1,284 |  | 29   
|Advances given                           |  |                                 |  |                 |  | 54                     |  |      |  |     |  |     |  | 1    |  |      |  | 1     |  | 1    |  |      |  | 55    |  | 1    
|Advances repaid                          |  |                                 |  |                 |  | 53                     |  |      |  |     |  |     |  | 42   |  |      |  |      |  | 42   |  |      |  | 53    |  | 1    
|Dividends paid                           |  | 109                              |  | 109              |  | 140                    |  | 857   |  | 857  |  | 806  |  |     |  |      |  |      |  | 966  |  | 966   |  | 946   |  | 21   
|Other non -operating income              |  | 123                              |  | 100              |  | 64                     |  |      |  |     |  |     |  |     |  |      |  |      |  | 123  |  | 100   |  | 64    |  | 1    
|Other operating costs                    |  | 698                              |  | 1,028            |  | 1,062                  |  |      |  |     |  |     |  |     |  |      |  | 10    |  | 698  |  | 1,028 |  | 1,072 |  | 24   
|Purchase of property, plant & equipments |  | 50                               |  | 436              |  | 399                    |  |      |  |     |  |     |  |     |  |      |  |      |  | 50   |  | 436   |  | 399   |  | 9    
|Sale of property, plant & equipments     |  | 8                                |  |                 |  |                       |  |      |  |     |  |     |  |     |  |      |  |      |  | 8    |  |      |  |      |  |     



|                                                                                                                                             |  |                                 |  |                 |  |                       |  |       |  |       |  |       |  |       |  |       |  |      
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | --------------- |  | --------------------- |  | ----- |  | ----- |  | ----- |  | ----- |  | ----- |  | -----
|                                                                                                                                             |  | As of March 31                 
|                                                                                                                                             |  | BeneficialOwner andSubsidiaries |  | PrincipalOwners |  | EquityMethodInvestees |  | Total
|Year End Balances                                                                                                                            |  | 2009                            |  | 2010            |  | 2009                  |  | 2010  |  | 2009  |  | 2010  |  | 2009  |  | 2010  |  | 2010 
|                                                                                                                                             |  | (In millions)                  
|                                                                                                                                             |  | Rs.                             |  | Rs.             |  | Rs.                   |  | Rs.   |  | Rs.   |  | Rs.   |  | Rs.   |  | Rs.   |  | (US$)
|Accounts receivables (including Rs 500 million and Rs 268 million for fiscals 2009 and 2010 respectively from Tata Teleservices
Ltd.)        |  | 1,192                           |  | 894             |  |                      |  |      |  | 242   |  | 598   |  | 1,434 |  | 1,492 |  | 33   
|Accounts payables (including Rs 237 million and Rs 84 million for fiscals 2009 and 2010 respectively from Tata Teleservices Ltd.)            |  | 1,199                           |  | 269             |  |                      |  |      |  | 142   |  | 668   |  | 1,341 |  | 937   |  | 21   
|Advances given                                                                                                                               |  | 30                              |  | 31              |  |                      |  |      |  | 23    |  | 25    |  | 53    |  | 56    |  | 1    
|Loans provided (net of adjusted loss in equity method investee of Rs. 580 million as at fiscal 2009 and Rs. 3,156 million as
at fiscal 2010) |  |                                |  |                |  |                      |  |      |  | 2,965 |  | 2,228 |  | 2,965 |  | 2,228 |  | 50   
|Convertible notes and warrants of equity method investee                                                                                     |  |                                |  |                |  |                      |  |      |  |      |  | 518   |  |      |  | 518   |  | 12   
|Interest receivable                                                                                                                          |  |                                |  |                |  |                      |  |      |  | 413   |  | 1,025 |  | 413   |  | 1,025 |  | 23   
|Other Current Assets                                                                                                                         |  |                                |  | 62              |  | 6                     |  | 6     |  |      |  |      |  | 6     |  | 68    |  | 2    
|License Fee paid under protest                                                                                                               |  |                                |  |                |  | 2,950                 |  | 2,899 |  |      |  |      |  | 2,950 |  | 2,899 |  | 64   
|Accrued Expenses and Other Current Liabilities:                                                                                              |  |                                 |  |                 |  |                       |  |       |  |       |  |       |  |       |  |       |  |      
|Advances received                                                                                                                            |  | 60                              |  |                |  |                      |  |      |  |      |  |      |  | 60    |  |      |  |     
|License Fees payable                                                                                                                         |  |                                |  |                |  | 896                   |  | 754   |  |      |  |      |  | 896   |  | 754   |  | 17   
|Deferred revenues (including Rs. 167 million and Rs. 443 million for fiscals 2009 and 2010 respectively from Tata
Teleservices Ltd.)         |  | 476                             |  | 645             |  |                      |  |      |  | 55    |  |      |  | 531   |  | 645   |  | 14   
|                                                                                                                                             |  |                                 |  |                 |  |                       |  |       |  |       |  |       |  |       |  |       |  |      
|Total                                                                                                                                        |  | 536                             |  | 645             |  | 896                   |  | 754   |  | 55    |  |      |  | 1,487 |  | 1,399 |  | 31   
|                                                                                                                                             |  |                                 |  |                 |  |                       |  |       |  |       |  |       |  |       |  |       |  |      
|License Fees payable (Non Current)                                                                                                           |  |                                |  |                |  | 1,741                 |  | 1,741 |  |      |  |      |  | 1,741 |  | 1,741 |  | 39   
|                                                                                                                                             |  |                                 |  |                 |  |                       |  |       |  |       |  |       |  |       |  |       |  |      

Loans to employees comprises of loans to acquire assets such as
computers and vehicles and for purchase of equity shares of the Company. The annual rate of interest at which the loans have been made to employees is at 4%. The loans are secured by assets acquired by the employees. As of fiscals 2009 and 2010
amounts receivable from employees aggregated Rs. 18 million and Rs. 8 million respectively. Interest free short-term advances made to employees aggregated to Rs. 1 million and Rs 1 million for fiscals 2009 and 2010, respectively.



F-52



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The Company also grants interest subsidy in excess of 4% of the interest rate for loans to employees for
purchases of property. The cost of interest subsidy of Rs. 14 million , Rs. 12 million and Rs. 12 million for fiscals 2008 , 2009 and 2010 , respectively, is included in other operating cost.

29. Commitments and contingencies

Commitments

Bank Guarantees

Bank
guarantees outstanding for fiscal years 2009 and 2010 are Rs. 2,206 million and Rs. 1,221 million (US$ 27 million) respectively. Bank guarantees are generally provided to government agencies, excise and customs authorities for business
licenses and for import activities. These guarantees may be enforced by the governmental agencies and customs authorities if they suffer any losses or damage through the breach of any of the covenants contained in the agreements.

Capital commitments

Capital commitments represent expenditures, principally relating to the construction of new buildings, undersea cables and expansion of transmission
equipment, which had been committed under contractual arrangements with the majority of payments due within a period of one year. The amount of these commitments totaled Rs.19,464 million (US$ 433 million) as of March 31, 2010. Out of
this total amount Rs. 14,518 million (US$ 323 million) is expected to be purchased in 2011.

The Company also has an obligation to
contribute Rs. 989 million and Rs. 1,213 million in SEPCO and Neotel respectively over a three year period. Out of this Rs. 484 million and Rs 595 million is expected to be contributed in SEPCO and Neotel respectively in 2011.

Other Commercial Commitments



|                          |  |                      |  |     |    
|------------------------- |  | -------------------- |  | --- | ---
|                          |  | As of March 31, 2010
|                          |  | (In millions)       
|Standby Letters of Credit |  |                      |  |     |    
|Less than 1 year          |  | Rs. 5,510            |  | US$ | 122
|1 to 3 years              |  | 114                  |  |     | 3  
|More than 3 years         |  | 5                    |  |     |   
|                          |  |                      |  |     |    
|Total amount committed    |  | Rs. 5,629            |  | US$ | 125
|                          |  |                      |  |     |    

Contingencies

The Company is involved in a variety of proceedings, claims and litigation arising in the ordinary course of business. The Company periodically assesses
its liabilities and contingencies in connection with these matters based upon the latest information available (with the assistance of external legal counsel wherever necessary). The Company accrues a loss contingency when it is probable that an
asset has been impaired or a liability has been incurred as of the balance sheet date, and the amount of loss can be reasonably estimated. In respect of loss contingencies where the reliable estimate of loss is a range, the amount accrued is the
better estimate of the loss within the range and when no amount within the range is a better estimate than any other amount, the minimum amount in the range in accrued. Loss contingencies that are reasonably possible but not probable as of the
balance sheet date, have been disclosed as contingencies with a range of possible loss, whenever it can be estimated.



F-53



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The following is a description of material claims and losses where a potential loss is reasonably
possible but not probable.

a) Business related claims

In April 2010, the Company voluntarily disclosed to the U.S. Department of Justice and the U.S. Securities and Exchange Commission the results of an
internal investigation conducted by outside counsel for the Company relating to the activities of a reseller of one of the Company's subsidiaries, Tata Communications International Pte Ltd. The internal investigation found evidence that the reseller
may have offered and made improper payments to officials of a government purchaser in a Southeast Asian country in connection with the resale of the Company's products. The investigation also found evidence that the Company's sales consultant in the
country was aware of the reseller's potentially improper activities. Such activities may have violated the U.S. Foreign Corrupt Practices Act. The investigation did not reveal any prior involvement or knowledge regarding these activities by senior
management of the Company or its subsidiary. The Company has taken remedial action, including terminating its relationship with the sales consultant and with the reseller. The Company cannot predict the ultimate consequences of these matters at
this time, nor can we reasonably estimate the potential liability, if any, related to these matters. However, based on the facts currently known, we do not believe that these matters will have a material adverse effect on our business, financial
condition, results of operations or cash flow.

In August, 2004, Teleglobe initiated investigations into potential instances of non-compliance
with the United States Foreign Corrupt Practices Act (FCPA) by ITXC Corp. (ITXC), which it had acquired. Those instances related to ITXCs operations in certain African countries prior to its acquisition by Teleglobe.
Teleglobe also voluntarily notified the SEC and the U.S. Department of Justice (the DOJ) of the matter, and the Company has been cooperating fully with the SEC and the DOJ. In February 2005, ITXC was also made the subject of a formal
order of investigation by the SEC in connection with possible violations of the FCPA and related violations of US securities laws. Resulting from complaints filed by the SEC and DOJ in the federal court in New Jersey, ITXCs former regional
director for Africa was charged with and sentenced for both civil and criminal violations of the FCPA. On September 7, 2006, the SEC filed a civil action in U.S. District Court in New Jersey against two former ITXC employees, charging them with
FCPA bribery and books and records violations. Both these former employees pleaded guilty to the charges and were sentenced in July and September 2008. The Company intends to continue to cooperate fully with the SEC and DOJ in the investigation. The
Company cannot predict the extent to which the SEC, the DOJ or any other governmental authorities will pursue administrative, civil or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions. The Company has not
identified, and does not believe it is likely that, any material adjustment to its consolidated financial statements is or will be required in connection with the results of this investigation, although it is possible that a monetary penalty, if
any, may be material to its results of operations in the period in which it is imposed.

On February 9, 2007, the
plaintiff, 21st Century Technologies Ltd. filed a suit against Teleglobe America Inc. before the Federal High Court of Nigeria, Lagos Division, alleging that Teleglobe improperly terminated a GlobeInternet Services Agreement pursuant to which
Teleglobe rendered Internet access and satellite connectivity services to 21st Century. The suit alleges that Teleglobes termination of the agreement was improper, resulting in damages arising from 21st Centurys lease of capacity from
INTELSAT. The plaintiff is seeking $2,067,000 as damages. The Company entered a conditional appearance and filed a motion challenging the jurisdiction of the Court to hear the matter in view of the jurisdiction provisions in the applicable Internet
Services Agreement. It is our assertion that Virginia, USA constitutes the proper venue for resolution of any disputes based upon the terms of the contract. All hearings for this matter have so far been adjourned and not proceeded. (Note that in
November 2003, Teleglobe filed suit against the plaintiff in Virginia, USA alleging that the plaintiff improperly terminated the abovementioned GlobeInternet Services Agreement, whereby the Company rendered Internet access and satellite connectivity
services to the plaintiff. On February 27, 2004, the Court entered a default judgment against 21st Century, and later set damages at $1,231,492.05. The Company is seeking to enforce the judgment in Nigeria. 21st Century initiated an action
before the Federal High Court of Lagos State, Nigeria, seeking a declaratory judgment barring enforcement of any judgment obtained by the Company based upon improper service of process. The High Court ruled in favour of 21st Century. The Company
appealed the ruling to the Court of Appeal and the appeal was heard on April 10, 2008. On July 4, 2008, judgment in the appeal was delivered in favour of the Company (the Court of Appeal set aside the judgment of the Federal High Court
where it refused to register the judgment obtained by Teleglobe in Virginia, USA). However,
21stCentury have filed a Notice of Appeal and Motion for
stay of execution of the Court of Appeal's judgment. The Company is presently awaiting the hearing notice and delivery of the ruling.



F-54



---

##### Table of Contents

Notes to Consolidated Financial Statements(Continued)



The Company is routinely party to suits for collection, commercial disputes, claims from customers
and/or suppliers over reconciliation of payments for voice minutes, circuits, Internet bandwidth and/or access to the public switched telephone network, leased equipment, and claims from estates of bankrupt companies alleging that we received
preferential payments from such companies prior to their bankruptcy filings. While management currently believes that resolving such suits and claims, individually or in aggregate, will not have a material adverse impact on the Company's financial
position, the FCPA investigations are subject to inherent uncertainties and managements view of this matter may change in the future. If an unfavorable final outcome were to occur, such an outcome could have a material adverse impact on the
Company's financial position and results of operations for the period in which the effect becomes reasonably estimable. Claims against the Company of Rs 446 million (US$ 9.9 million) are disputed by the Company of which an amount of Rs
83 million (US$ 1.8 million) has been accrued as liability. If the dispute goes against the Company, Rs. 363 million (US$ 8.1 million) will be charged to statement of operations.

Others

Telecom Regulatory Authority of
India (TRAI) reduced the Access Deficit Charge (ADC) rates effective April 1, 2007. All telecom services providers including NLD and ILD Operators in India are bound by the TRAI regulations; accordingly Tata
Communications recorded the cost relating to ADC at revised rates as directed by TRAI. However, BSNL continued to bill at the ADC rate applicable prior to 1st April 2007. BSNL had filed an appeal against the TRAI directive of reduction in ADC.
The appeal is pending with TDSAT and in case the appeal is upheld, the possible liability on Company is Rs. 3,120 million (US$ 61 million).

As of March 31, 2010, there were other claims of Rs. 1,795 million (US$ 35 million) which includes claims of Rs. 720 million (US$ 14
million) by DoT  WPC wing towards licence fees and Rs. 317 million (US$ 6 million) by a customer for loss of business on account of interruption of private leased circuits.

In fiscal 2010, DoT completed their assessment for fiscal 2006 and raised a demand of Rs. 1,046 million. The Company challenged DoTs order in the
TDSAT and TDSAT, in its order dated August 19, 2010, held: a) a license fee is not applicable on non-telecom income and other miscellaneous income; b) penalty and interest thereon is not applicable on a shortfall of a license fee; c) a deductions in
AGR for cost items is not allowed; d) a suo-moto inter-license adjustment by the licensee is not permitted. Hence, the Companys liability was reduced to Rs. 50.83 million including interest up to September 2010.

The Company intends to challenge the TDSAT order in respect of the disallowance of cost items before the Honorable Supreme Court, where similar disputes
for the previous years are pending. The Company also intends to file a separate petition in TDSAT for adjustment for an excess amount paid against proposed ISP VPN licenses.



F-55