MEMORANDUM OF UNDERSTANDING

                                     BETWEEN

                          VIDESH SANCHAR NIGAM LIMITED

                                       AND

                           MINISTRY OF COMMUNICATIONS

                        DEPARTMENT OF TELECOMMUNICATIONS

                                                        FOR THE YEAR 2001-2002



<PAGE>



                                    PREAMBLE

         Whereas the Government will provide  necessary and required support and
assistance, VSNL will be accountable for results and achievement of its targets.
This MOU is intended to support VSNL and make the  organisation  accountable  in
achieving  its  long-term  objectives  as well as  short-term  plans by  optimal
utilisation  of its  resources  and  enhancement  in the  level  of  operational
efficiency, productivity and other parameters of corporate performance.

         This MOU has the following Sections:

         SECTION I         MISSION, BROAD GOALS & OBJECTIVES

         SECTION II        COMMITMENTS OF VSNL FOR THE YEAR 2001-02

         SECTION III       DELEGATION OF POWERS

         SECTION IV        ASSISTANCE FROM THE GOVERNMENT

         SECTION V         FREQUENCY OF MONITORING AND INFORMATION FLOW

                                                               * * * * *



<PAGE>



                                   SECTION - I

                                     MISSION


                                    TO CREATE

                              A GLOBAL AND SEAMLESS

                             NETWORK OF INFORMATION

                                 SUPER HIGHWAYS;

                                   TO CONNECT

                              PEOPLE AND COMPUTERS

                                COST EFFECTIVELY

                                                           AND EFFICIENTLY;

                                                          ANYTIME, ANYWHERE.



<PAGE>



                           BROAD GOALS AND OBJECTIVES

(1)     To plan and provide full range of telecommunications  services including
        Value Added  Services  like  Business  Network,  High Speed  Leased Line
        Services etc.,  from VSNL Gateways in India to all parts of the world to
        users at sea, on land and in air.



(2)     To develop sound marketing strategy with cost effective solutions.



(3)     To seek, promote and foster excellence amongst the work force, improve
        productivity, update human and machine capabilities.



(4)     To continuously enhance quality of service and to continue to improve
        shareholder value.



(5)     To  actively  seek  expansion  of  company's  operations  through  joint
        ventures also for entering new areas such as  International  Value Added
        Services,  Regional  hubbing of traffic and to position India as a major
        regional  telecommunications  operator  in order to  achieve  the  Gross
        Margin as projected.



(6)     To achieve and maintain high degree of customer confidence by continuous
        upgradation of technology,  service  performance and prompt attention to
        customers.


<PAGE>



                                  SECTION - II

                    COMMITMENTS OF VSNL FOR THE YEAR 2001-02

In fulfillment of its commitments under MOU, VSNL undertakes to achieve
performance targets as under:-
<TABLE>
<CAPTION>

---------------------------------- -------------- --------- ------------------------------------------------------ -----------------

                                                                               CRITERIA VALUE
CRITERIA                           UNITS            WEIGHT
*                                                       **                                                                  BE (PSE)
---------------------------------- -------------- --------- ------------------------------------------------------ ----------------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ----------------
<S>                                               <C>       <C>       <C>       <C>         <C>         <C>        <C>        <C>
                                                            1         2         3           4           5

---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- -----------------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
                                                            HIGH                                        LOW        2000-01   2000-02

---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------------------------------------------------------------------------------------------------------------------------------
I  PHYSICAL
------------------------------------------------------------------------------------------------------------------------------------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(1) Telephone                      Mrts. Million  9%        2994.30   2851.71   2709.12     2573.67     2444.98    2480      2851.71
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(2) Leased Voice/Data Circuits     Nos.           3%        @4066.00  3800      3610        3430        3258       900        3800
   (including high speed
circuits, 64 K and equivalent)
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------------ --------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(3) Internet       Bandwidth       Mbps           5%        @1578.25  1475      1401        1330        1264       -          -
------------------ --------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------------ --------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
                   Subscriber      Nos.           2%        @784738   733400    696730      661894      628799     476000    733400
------------------ --------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(4) Paid minutes per employee      Minutes        3%        3207      3055      2902        2757        2619       2664       3055
per day
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(5) Project implementation #       Refer Annex 3  8%        1         2         3           4           5          -          -
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------------------------------------------------------------------------------------------------------------------------------

II FINANCIAL: ##
------------------------------------------------------------------------------------------------------------------------------------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(6) Cross Margin (Profit before    Rs. Million    26%       24130.75  22512.44  20894.12    19356.73    17896.20   23927    22512.44
Interest, Tax and Depreciation)
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(7) Net Profit after tax)/Capital  Percentage     26%       17.38     16.24     15.09       14.00       12.96      23.55      16.24
employed x 100
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(8) Sundry Debtors (traffic) to    Percentage     4%        35        40        43          46          49         -          -
Cross
revenue
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
Profit after tax                   Rs. million              15059.02  14063.75  13068.49    12122.99    11224.77   16062.70 14063.75
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- ------------------------------------------------------ ---------- ------
Capital employed                   Rs. million                                 86622.78                            68218    86622.78
(at the end of the year)
---------------------------------- -------------- --------- ------------------------------------------------------ ---------- ------
------------------------------------------------------------------------------------------------------------------------------------

III QUANTATIVE:-
------------------------------------------------------------------------------------------------------------------------------------
------------ ---------- ---------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
                        Metro                     1%        53.75     51.25     48.69       46.25       43.93      -          -
(9) ASR      (a)                   Percentage
             Incoming
------------ ---------- ---------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------ ---------- ---------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
                        Rest of                   1%        33.6      32        30.4        28.9        27.45      -          -
                        India
------------ ---------- ---------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
------------ --------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
             (b) Outgoing                         2%        54.07     51.5      48.9        46.48       44.16      -          -
------------ --------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(10) Network availability          Percentage     2%        99.0      98.7      98.4        98.1        97.8       -          -
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(11) Consumer satisfaction         Percentage     5%        1         2         3           4           5          -          -
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(12) Timely submission of draft    Date           1%          Before    Before      Before      Before     Before  -          -
MOU                                                         Dec. 24,  Dec. 27,    Dec. 29,    Dec. 31,   Dec. 31,
for 2002-03                                                     2001      2001        2001        2001       2001
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(13) Timely submission Composite   Date           1%          Before    Before      Before      Before     Before  -          -
______ for MoU 2001-02 on the                               April       May 2,      May 4,      May 6,     May 8,
basis of                                                         30,      2001        2001        2001       2001
provisional data                                                2001
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
(14 Timely signing of MoU for      Date           1%          Before  April 1,  April 6, ,   April 11,     Beyond  -          -
2001-02                                                     April 1,      2001        2001        2001  April 11,
                                                                2001                                         2001
---------------------------------- -------------- --------- --------- --------- ----------- ----------- ---------- ---------- ------
</TABLE>



<PAGE>



NOTES.

        Effect on  Declining  Settlement  Rates and  illegal  flow of  telephony
        traffic  through Data circuits has not been taken into  account.  Normal
        variations/escalations  in inputs  have been  taken into  account  while
        working out MoU targets.
** Notes on weightage for different  parameters are in Annexure 1. * Explanatory
notes on the above  criteria  and the  criteria  values are in Annexure 2. # For
details of projects refer Annexure 3.
##      Foreign  Exchange  Earnings  out of  traffic  revenue  (gross) as per BE
        2001-02 is  estimated  to be Rs.  42.611.63  million  equal to US$926.34
        million.  Foreign  Exchange  Cost out of traffic  cost (gross) as per BE
        2001-02  is  estimated  to be  Rs.13424.3  million  equal to US  $291.83
        million  (at an  exchange  parity  rate of US $1 = Rs.46).  Net  foreign
        exchange earnings works out to Rs.29,187.38  million  equivalent to US $
        634.51 million.
@       For these performance criteria Level 1 values are 107% of Level 2 values
        as discussed in ATF meeting held on 20 February 2001.  Data on the above
        performance indicators for last 5 years is given in Artnexure 4.

ASSUMPTIONS:

a)      The financial  parameters  are agreed to be kept at the same level as BE
        figures,  with specific assumption that during the year collection rates
        for  international  telephony  shall  be  reduced  as  proposed  in  the
        discussion  paper  issued by TRAI.  If that does not  happen,  level two
        figures for financial parameters shall stand reduced  proportionately to
        be on par with the figure of telephone paid minutes of 285l.7lmillion at
        level 2 with 5% variation at other levels

b)      In order to achieve the projected level of Financial Parameters, and for
        the purpose of maximising  the asset  utilisation,  the Company shall be
        allowed equal  opportunity  to  participate in joint ventures to provide
        basic long distance and value added services.


<PAGE>



                                  SECTION - III

                              DELEGATION OF POWERS

All  the  powers  to be  delegated  to  MOU  signing  companies  as  well  as to
`Navaratna'  companies as per the  notifications  issued by the Government  from
time to time shall accrue to VSNL.


<PAGE>



                                  SECTION - IV

                         ASSISTANCE FROM THE GOVERNMENT

1.      Department of Telecom will provide all possible assistance to VSNL
        within the overall policy framework of the Government.



2.      The existing revenue sharing formula between VSNL and BSNL will be valid
        up to 31.03.2002 as already agreed.



3.      Facilities will be provided as may be necessary, to enable VSNL to
        provide International Calling Card services and associated
        value added services.


<PAGE>



                                   SECTION - V

                  FREQUENCY OF MONITORING AND INFORMATION FLOW

Performance  of VSNL will be evaluated by its  achievements  against the targets
given in this MOU. The quarterly  report on the  achievements  against the above
targets  would be sent by VSNL to  DPE/DOT  within  30 days of the  close of the
quarter.  VSNL will  indicate  reasons for  shortfall,  if any, in achieving the
targets in these reports.

S.K. GUPTA                                   SHYAMAL GHOSH
Chairman & Managing Director                 Secretary, Department of Telecom &
Videsh Sanchar Nigam Limited                 Chairman, Telecom Commission
Mumbai.                                      New Delhi.




Dated :  28 March, 2001
Place  : New Delhi


<PAGE>



                                                                    ANNEXURE - 1

                NOTE ON WEIGHTAGE GIVEN FOR DIFFERENT PARAMETERS.
                ------------------------------------------------

1.       VSNL's overseas telecommunications  functions provide telephony, telex,
         telegraphy  and  other  services  to  Indian  customers.  However,  the
         telephony  service dominates in the overall business in terms of volume
         of  revenue  earned to the  extent  of about 90% of the total  revenue.
         Weightage given to this is 9%. Leased  voice/data  service which is now
         gaining importance is given weightage of 3%.

2.       Parameter for Internet is split in two parts, viz. internet bandwidth
         and number of Internet customers, with 5% and 2% weightage
         respectively.

3.       The improvement in productivity of employees is reflected under the
         criteria 4. Weightage given is 3% as per discussions at ATF

4.       In line with the  guidelines  issued by the  Government,  parameters of
         gross  margin  and Net  profit  to  capital  employed  ratio  have been
         included.  However,  weightage  given to these  parameters  are 26% for
         criteria 6 and 26% for criteria 7 as per the discussions in ATF.

5.       VSNL being a service oriented organisation, the quality of service
         provided is reflected under criteria Nos. 9 and 10 which show, up and
         running hours of the network and adequacy of network facilities to
         satisfy customer demands.

6.       Customer satisfaction (criteria 11) is a prime parameter for any
         service organisation like VSNL. Customer satisfaction is evaluated
         through an assessment by art independent organisation.

7.       Criteria 12, 13 & 14 regarding timely submission of MOU etc. have been
         added as per DPE's requirement with total weightage of 3%.



<PAGE>



                                                                    ANNEXURE - 2

                EXPLANATORY NOTES ON CRITERIA AND CRITERIA VALUES

1.       TELEPHONE PAID MINUTES

         2851.71  million  telephone  paid  minutes  has been  taken at level 2,
         presuming 15% growth over 2000-01 level 2 figure of 2480 telephone paid
         minutes of telephone  traffic.  5% variation is presumed for each level
         from 1 to 5.

2.       LEASED VOICE/DATA CIRCUITS

         The number of Voice/data circuits  (including high speed circuits,  64k
         and  equivalent)  at the end of the year 2001-02 is expected to be 3800
         circuits  and is shown at level 2. A variation of 7% is shown for Level
         I and 5% progressively at other levels as per

        discussions in ATF held on 20 February 2001.

3.       INTERNET SUBSCRIBERS

         (a)      A number of  733,400  is taken to be the  number  of  Internet
                  subscribers as of 31 March, 2002 as level 2 figure,  variation
                  of 5% is taken for the other levels.  Variation of 7% is taken
                  on Level I and 5%. for all other levels as per  discussions in
                  ATF held on 20 February 2001.
         (b)      As  discussed  in  ATF  last  year,   Bandwidth  parameter  is
                  continued. Bandwidth of 1475 is taken at level 2. Variation of
                  7% is  taken  on Level I and 5% for all  other  levels  as per
                  discussions in ATF held on 20 February 2001.

4.       PAID MINUTES PER EMPLOYEE PER DAY

         The term "paid minutes" is defined as the sum of

         a)       Total telephone paid Minutes;

         b)       Total telex paid Minutes (for each level from high to low in
                  million paid minutes 7.4, 7.05, 6.70, 6.36 and 6.04);

         c)       Total GPSS connect time (for each level from high to low in
                  million paid minutes 3.15, 3.0, 2.85, 2.70 and 2.57)

         300 days are  reckoned  in a year.  The volume of paid  minutes at each
         level is divided by estimated number of employees i.e. 3123 (Average of
         estimated  number of  employees  as on  31.3.2001 - 3075 and  estimated
         number of employees as on 31.3.2002 -- 3170.  Resulting  figures of per
         employee per day are shown at respective levels.

5.       PROJECT IMPLEMENTATION

         Important  projects whose  implementation has got direct bearing on the
         performance of the Company are identified  (Annexure 3). As directed by
         DPE  afler  ATF  meeting,  month  of  completion  at  levels 1 to 5 are
         indicated.  If the date of  completion  of a particular  project  stage
         falls  between  months  mentioned  at any  two  levels,  score  will be
         calculated  based on the month  mentioned  against the  nearest  level,
         total score culminating in to a consolidated score between 1 to 5. Each
         project will carry equal weightage.

6.       GROSS MARGIN

         Gross  margin is taken as the excess of Traffic  Revenue,  Revenue from
         Intelsat/Inmarsat  and other income over direct expenses.  It is profit
         before interest, tax and depreciation. BE 2001-02 figure of Rs.22512.44
         million appears at level 2 with due variation at other levels.

7.       NET PROFIT TO CAPITAL EMPLOYED

         Net profit is profit  after tax.  The capital  employed of  Rs.86622.78
         million is  estimated  as at end of the year and is worked out as fixed
         assets  including  capital work in progress plus investment in Intelsat
         and Inmarsat and net current  assets.  The commercial  investments  and
         return  on the same have been  excluded.  Indicated  figure is ratio of
         profit after tax to capital employed.

8.       SUNDRY DEBTORS (TRAFFIC) TO GROSS REVENUE IN PERCENTAGE
         -------------------------------------------------------

         In international telecommunication business, as per CCITT arrangements,
         the traffic figures in paid minutes/paid  words for different  services
         are exchanged  between  different  administrations  on a monthly basis.
         After  reaching an agreement  on the quantum of the traffic  volume for
         each  service,  the  accounts  are settled by applying the agreed Total
         Accounting   Rate  (TAR)  between  India  and   corresponding   foreign
         administrations  on a quarterly basis. Thus,  theoretically,  only nine
         months of traffic data would be exchanged before the close of the year.
         However,  the  acceptance  of the traffic  figures and effecting of the
         payment  will take  further  time,  say about  another 3 months.  Thus,
         theoretically;  collection  of a  maximum  of only  50% of  yearly  net
         revenue could be achieved in a year from foreign  administrations.  The
         quantum  of  settlement  relates  not only  between  VSNL  and  foreign
         administrations  but also between VSNL and DTS, for the account towards
         domestic  portion of the traffic.  As the percentages of sundry traffic
         debtors is worked out to gross revenue and after  assuming that revenue
         from DTS has been  realised/adjusted,  around 40% of Gross revenue will
         remain  outstanding in a year. This figure,  which is a BE figure,  has
         been shown at level 2 with due variation at other levels.

9.       CALL COMPLETION PERFORMANCE - ASR (INCOMING & OUTGOING)
         ------------------------------------------------------

         The  parameter  indicates  call  clearance  in both  inward and outward
         direction of international exchanges. The Answer to Seizure Ratio (ASR)
         of calls through the exchanges in both the  directions  are  calculated
         based on sample day readings  taken once in a month in both  directions
         from/to the top ten  countries.  The annual ASR in  percentage  in both
         directions  is  calculated  based on the  average  of samples of twelve
         months separately for incoming and outgoing traffic.

10.      NETWORK AVAILABILITY

         Network  performance  is judged  as  availability  of trunks  excluding
         outages due to DTS link failures at the international Gateway Exchanges
         to  put  through   telephone   calls  to  foreign   destinations.   The
         availability  figures based on the level  achievable  corresponding  to
         down  time of 5 Hours,  7 Hours,  9 Hours,  11 Hours  and 13 hours in a
         month  are  indicated  respectively  at  levels  1, 2, 3, 4 and 5.  The
         parameter will be evaluated by judging the  performance at all the four
         gateway exchanges for the top ten countries.

11.      CUSTOMER SATISFACTION

         Customer  satisfaction  will be evaluated  through an  assessment to be
         carried out by an independent agency of national standing.

12 to Criteria for timely submission of MOU, Performance evaluation for MOU, and
14 timely signing of MOU have been added as required by DPE.



<PAGE>



                                                                     ANNEXURE -3
        PROJECTS WHOSE PROGRESS OF IMPLEMENTATION DURING THE YEAR 2001-02
                      WOULD BE VITAL FOR VSNL PERFORMANCE.
                       -----------------------------------
<TABLE>
<CAPTION>

  ----------------------------------------------------------------------------------------------------------------------------------
<S>             <C>                                       <C>                     <C>               <C>           <C>        <C>

     No    Name of the Project                             Level 1            Level 2            Level 3          Level 4    Level 5
  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     1.    Establishment of ATM Gateway Nodes - Commencement   ugust 2001 ctober 2001 anuary 2002  March 2002   May 2002
           of installation at two locations
  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     2.    Standard B Earth Station at Hyderabad Gateway - Commissioning   Sept. 2001   Nov. 2001   Feb. 2002  April 2002  June 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     3.    Standard F3 Earth Station at Patna - Commissioning              June 2001  Sept. 2001   Dec. 2001  March 2002   May 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     4.    SAFE Cable Project - Commissioning                             Dec. 2001  March 2002   June 2002 August 2002  Oct. 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     5.    Standard E3 Earth Station at Greater Kailash, N.Delhi  Feb. 2002  March 2002  April 2002    May 2002  June 2002
           - Award of Contract
  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     6.    Gandhinagar Gateway Earth Station - Land acquisition for Gateway May 2001   July 2001  Sept. 2001   Nov. 2001  Dec. 2001
           Earth Station
  --------------------------------------------------------------------------------------------------------------------------------
  --------------------------------------------------------------------------------------------------------------------------------
     7.    INMS -Award of Contract                                         Dec. 2001   Feb. 2002  April 2002   June 2002  July 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     8.    VoIP -Award of Contract                                         Oct. 2001   Dec. 2001   Feb. 2002  April 2002   May 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
     9.    F3 Earth Station Hub at Gurgaon -Commencement of installation   Dec. 2001   Feb. 2002   June 2002 August 2002  Oct. 2002

  ----------------------------------------------------------------------------------------------------------------------------------
  ----------------------------------------------------------------------------------------------------------------------------------
    10.    Launch of Internet Services in non-metro Gateways               Dec. 2001  March 2002   June 2002  Sept. 2002  Dec. 2002

  ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>



                                                                    ANNEXURE - 4
<TABLE>
<CAPTION>

                       PERFORMANCE INDICATORS PAST TRENDS

----------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>     <C>              <C>    <C>             <C>     <C>

PHYSICAL                              UNITS          94-95      95-96          96-97      97-98        98-99    1999-2000
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
TELEPHONE                            MINUTES           942    1147.56         138493    1684.51      1935.01      2245.83

                                     MILLION
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
LEASED VOICE DATA CIRCUIT            NUMBERS           233        299            446        638          661          659
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
INTERNET BANDWIDTH                    MBPS               -      4.408         15.640     27.640       79.152          167
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
INTERNET CUSTOMERS                                       -       5160          29116      87000       213045       366432
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PAID MINUTE/PER                      MINUTES          1166       1403           1652      19.85         2231      2518.46
EMPLOYEE PER DAY
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
REVENUE                              RUPEES      36068.095   44730.71     52853.05 S   64361.33     71735.68     72305.08
                                        S
                                     MILLION
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PROJECT IMPLEMENTATION                  %            63.33     102.85             90      1..81         2.16            4
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
CAPITAL EMPLOYED                     RUPEES       11697.24   14293.03       20371.72   28317.56     39949.10        52149

                                     MILLION
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
GROSS MARGIN (PROFIT               RS. MILLION     5347.21    7717.91        9097.97   14951.33     19942.86        20852

BEFORE INTEREST, TAX AND

DEPRECIATION)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
NET PROFIT/CAPITAL                      %            25.55                     24.78      34.18        33.17      16.11##
                                      28.60
EMPLOYED                                                            .
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
   TOTAL O/S TO GROSS REVENUE           %            29.45         30          28.95       28.5        29.76        36.88
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
            INCO       Metro                         30.48      47.17          48.56      50.47        52.43        54.48
            MING

                                        %
                       -----------                           ---------------------------------------------------------------
------------           -----------                           ---------------------------------------------------------------
                       Rest of                                  26.71          31.56      31.86        32.16        33.49
                       India
----------------------------------              ----------------------------------------------------------------------------
----------------------------------              ----------------------------------------------------------------------------
ASR         OUTGOING                                 51.22      53.41          52.78      53.03        53.27        51.42
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
NET F.H. .EARNTNIGS               R.S. MILLION      9016.2   15311.79          18939   23977.65     47376.23     48171.18
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

         @        Capital  employed  figure  excludes an amount of  Rs.11.909.88
                  million representing monies raised by way of Euro equity issue
                  for the reason  that these  funds were  raised only on 27 Mach
                  1997.
         ##       On account of the unforeseen development of writing down
                  investment in ICO by Rs. 5127 million the net profit which
                  otherwise would have been Rs. 13530 million is taken as
                  Rs. 8403 million only. But fur ICO investment write down,
                  the ROCE would have been 25.95%.