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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended March 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 Date
of event requiring this shell company report
 For the transition period from  to
 Commission File Number 000-30735
 REDIFF.COM INDIA LIMITED
  
 
 
  Title of each Class
    
    Name of each exchange on which registeredNone
    
    Not Applicable
  
  
  Yes o No þ
 Yes þ No o
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  U.S. GAAP þ
    
    International Financial Reporting Standards as
issued by the International Accounting Standards
Board o
    
    Other o
 o o
 o þ




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TABLE OF CONTENTS
 PageCROSS REFERENCE TO FORM 20-F ITEM HEADINGS
    
    
    1CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
    
    
    4FORWARD-LOOKING STATEMENTS
    
    
    5EXCHANGE RATES
    
    
    6SELECTED FINANCIAL DATA
    
    
    7RISK FACTORS
    
    
    8BUSINESS
    
    
    29MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    45MANAGEMENT
    
    
    62RELATED PARTY TRANSACTIONS
    
    
    72EXCHANGE CONTROLS
    
    
    73TRADING MARKET
    
    
    77RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
    
    
    78PRINCIPAL SHAREHOLDERS
    
    
    85TAXATION
    
    
    87CONTROLS AND PROCEDURES
    
    
    94PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    96PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASER
    
    
    97PRESENTATION OF FINANCIAL INFORMATION
    
    
    98ADDITIONAL INFORMATION
    
    
    99EXHIBIT INDEX
    
    
    106INDEX TO FINANCIAL STATEMENTS
    
    
    F-1Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2Exhibit 15.1




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CROSS REFERENCE TO FORM 20-F ITEM HEADINGS
 PART I
 Item 1.
    
    Identity of Directors, Senior Management and AdvisersNot applicable.Item 2.
    
    Offer Statistics and Expected TimetableNot applicable.Item 3.
    
    Key InformationSee
Exchange Rates, Risk Factors and
Selected Consolidated Financial Data.Item 4.
    
    Information on the CompanySee Business, Managements Discussion and Analysis of Financial Condition and
Results of Operations and Additional
Information.Item 4A.
    
    Unresolved Staff CommentsNot applicable.Item 5.
    
    Operating and Financial Review and ProspectsSee Risk Factors and Managements Discussion and Analysis of Financial Condition and
Results of Operations.Item 6.
    
    Directors, Senior Management and EmployeesSee Management and Principal Shareholders.Item 7.
    
    Major Shareholders and Related Party TransactionsSee Principal Shareholders, Related Party Transactions and Additional
Information.Item 8.
    
    Financial InformationSee the Report of Independent Registered Public Accounting Firm, U.S. GAAP Consolidated
financial statements and the notes thereto for Rediff.com India Limited for the fiscal
years ended March 31, 2008, 2009 and 2010 and the related three-year period ended March
31, 2010. Also see Business  Legal Proceedings and Managements Discussion and
Analysis of Financial Condition and Results of Operations.Item 9.
    
    The Offer and ListingSee Trading Market.Item 10.
    
    Additional InformationSee Managements Discussion and Analysis of Financial Condition and Results of
Operations  Acquisitions and Divestments  Value Communications Corporation,
Exchange Controls, Restriction on Foreign Ownership of Indian Securities,
Taxation and Additional Information.
  1




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Item 11.
    
    Quantitative and Qualitative Disclosures About Market RiskSee Managements Discussion and Analysis of Financial Condition and Results of
Operations  Market Risks.Item 12.
    
    Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13.
    
    Defaults, Dividend Arrearages and DelinquenciesNot applicable.Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of ProceedsSee Additional Information  Memorandum and Articles of Association.Item 15.
    
    Controls and ProceduresSee Controls and Procedures.Item 16A.
    
    Audit Committee Financial ExpertSee Management.Item 16B.
    
    Code of EthicsSee Management.Item 16C.
    
    Principal Accountant Fees and ServicesSee Principal Accountant Fees and Services.Item 16D.
    
    Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated PurchasersSee Purchases of Equity Securities by the Issuer and Affiliated PurchasersItem 16F.
    
    Change in Registrants Certifying AccountantNot applicable.Item 16G.
    
    Corporate GovernanceSee Management  NASDAQ Corporate Governance Requirements.
  2




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PART IIIItem 17.
    
    Financial StatementsNot applicable.Item 18.
    
    Financial StatementsSee the Report of Independent Registered Public Accounting Firm, U.S. GAAP Consolidated
financial statements and the notes thereto for Rediff.com India Limited and its
consolidated subsidiaries for the fiscal years ended March 31, 2008, 2009 and 2010 and
the related three-year period ended March 31, 2010.Item 19.
    
    ExhibitsSee the Exhibit Index and the attached exhibits.
  3




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CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
     4




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FORWARD-LOOKING STATEMENTS
  
    
    our goals and strategies;
 
    
    our recently acquired businesses and other acquisitions, investments and divestments;
 
    
    the impact of regulations and court orders on our business;
 
    
    our future investments, costs and working capital;
 
    
    the importance and expected growth of Internet technology,
including sales of personal computers and mobile phones;
 
    
    the pace of change in the Internet market;
 
    
    the demand for Internet services; and
 
    
    advertising demand and revenues.
    5




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EXCHANGE RATES
   Fiscal Year Ended March 31,
    
    Period End
    
    

Average (1)(2)
    
    
    High
    
    
    Low(Rs.)2006
    
    
    44.61
    
    
    
    44.30
    
    
    
    46.33
    
    
    
    43.302007
    
    
    43.59
    
    
    
    45.22
    
    
    
    46.95
    
    
    
    43.142008
    
    
    39.97
    
    
    
    40.13
    
    
    
    43.15
    
    
    
    39.272009
    
    
    50.95
    
    
    
    46.46
    
    
    
    52.06
    
    
    
    39.892010
    
    
    45.14
    
    
    
    47.36
    
    
    
    50.53
    
    
    
    44.94
 
 Notes:(1)
    
    The average rate for each period differed from the exchange rates used
in the preparation of our financial statements.(2)
    
    The column titled Average represents the average of the closing rate
as at the last day of each month during the period.  Month
    
    High
    
    
    Low(Rs.)March 2010
    
    
    46.02
    
    
    
    44.94April 2010
    
    
    44.73
    
    
    
    44.33May 2010
    
    
    47.57
    
    
    
    44.56June 2010
    
    
    47.28
    
    
    
    45.64July 2010
    
    
    47.33
    
    
    
    46.46August 2010
    
    
    47.08
    
    
    
    46.02
   6




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SELECTED CONSOLIDATED FINANCIAL DATA
  Fiscal Years Ended March 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(in US$ thousands, except per share data)Statement of Operations data:Revenues
    
    
    18,701
    
    
    
    28,676
    
    
    
    32,249
    
    
    
    25,429
    
    
    
    18,843Cost of revenues
    
    
    6,408
    
    
    
    7,462
    
    
    
    9,699
    
    
    
    10,376
    
    
    
    10,115Operating expenses
    
    
    12,289
    
    
    
    18,015
    
    
    
    24,669
    
    
    
    30,589
    
    
    
    20,302Net income (loss)
    
    
    1,213
    
    
    
    6,963
    
    
    
    4,908
    
    
    
    (11,258
    )
    
    
    (8,028
    )Earnings (loss) per Equity Share  basic
    
    US$
    0.09
    
    
    US$
    0.48
    
    
    US$
    0.336
    
    
    US$
    (0.770
    )
    
    US$
    (0.552
    )Earnings (loss) per Equity Share  diluted
    
    US$
    0.09
    
    
    US$
    0.47
    
    
    US$
    0.332
    
    
    US$
    (0.770
    )
    
    US$
    (0.552
    )Weighted average number of equity shares- Basic
    
    
    13,487
    
    
    
    14,543
    
    
    
    14,607
    
    
    
    14,615
    
    
    
    14,563- Diluted
    
    
    13,764
    
    
    
    14,924
    
    
    
    14,772
    
    
    
    14,615
    
    
    
    14,563
 As of March 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(in US$ thousands)Balance Sheet Data:Cash and cash equivalents
    
    
    53,094
    
    
    
    53,546
    
    
    
    59,033
    
    
    
    45,521
    
    
    
    44,690Current assets
    
    
    60,652
    
    
    
    65,851
    
    
    
    74,208
    
    
    
    54,345
    
    
    
    52,244Current liabilities
    
    
    7,239
    
    
    
    8,899
    
    
    
    10,570
    
    
    
    6,927
    
    
    
    8,161Total assets
    
    
    74,110
    
    
    
    86,459
    
    
    
    101,422
    
    
    
    71,612
    
    
    
    69,541Total shareholders equity
    
    
    66,870
    
    
    
    77,223
    
    
    
    90,150
    
    
    
    64,007
    
    
    
    60,606
  *
    
    The selected financial data set forth above should be read in
conjunction with the section entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations and the
financial statements and the notes to those statements included
elsewhere in this annual report.**
    
    Certain items in the selected financial data set forth above were
reclassified in conjunction with the paragraph Reclassifications of
certain items within the consolidated financial statementsin the
section entitled Managements Discussion and Analysis of Financial
Condition and Results of Operations.  7




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RISK FACTORS
 RISK FACTORS
 An investment in our ADSs involves a high degree of risk. You should carefully consider the
following information about risks, together with the other information contained in this annual
report on Form 20-F , including our consolidated financial statements and related notes, before you
decide to buy our ADSs. If any of the circumstances or events described below actually arises or
occurs, our business, results of operations and financial condition would likely suffer. In any
such case, the market price of our ADSs could decline, and you may lose all or part of your
investment. This annual report also contains forward-looking information that involves risks and
uncertainties. Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of many factors, including the risks faced by us described
below and elsewhere in this annual report.
 Risks Related to our Business
 We face significant competition for users, advertisers, publishers and distributors,
principally from Google, Yahoo, Facebook and MSN but also from other smaller competitors
         8




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More individuals are utilizing non-PC devices to access the Internet, and versions of our
services developed for these devices might not gain widespread adoption by the devices users,
manufacturers, or distributors or might fail to function as intended on some devices.
   If we fail to detect click fraud or other invalid clicks, we could lose the confidence of our
advertisers, which would cause our business to suffer.
  New technologies could block our ads, which would harm our business.
  The ongoing global slowdown, especially in India and the United States, could continue to
negatively impact revenues from some of our key customer segments
    9




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Our publication business in the United States and Canada faces competition
   We may be required to record a significant charge to earnings if our goodwill, long lived
assets, or investments in equity interests become impaired
   10




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We have a history of losses. We may incur losses in the future and we may not achieve or
maintain profitability
    Our revenues could be adversely affected if we are unable to successfully adapt to new forms
of pricing for the services and products we offer
  
    
    loss of visitors and decreased website traffic;
    
    loss of paid subscribers;
    
    loss of advertisers;
    
    reduced operating margins;
    
    loss of market share; and
    
    diminished value in our services.
  Increasing consumer resistance to online advertising may result in loss of revenues
   11




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Our quarterly operating results may fluctuate significantly and may fail to meet the
expectations of securities analysts and investors, which may cause the price of our ADSs to decline
  
    
    increased competition;
    
    continuing slowdown in the Indian and global economies
    
    lower than expected revenues from one or more of our customers;
    
    changes in prices for our product and service offerings;
    
    increases in personnel, marketing and other operating expenses;
    
    our ability to attract new users and to retain existing users at reasonable costs;
    
    our ability to adequately maintain, upgrade and develop our website,
our computer network and the systems that we use to process customer
orders and payments;
    
    the timing of our expansion plans in India and other geographic markets;
    
    seasonality in retail sales;
    
    technical difficulties, system or website downtime or Internet service disruptions; and
    
    entry into new businesses or development of new products or services requiring
substantial investments.
  We may not be able to grow our business if online advertising in our markets does not expand
  
    
    our ability to attract and retain advertisers at profitable rates in light of intense competition;
    
    our ability to generate and continue to grow a large community of
users with demographics attractive to advertisers;
    
    advertisers acceptance of the Internet as an effective and sustainable medium;
    
    the effectiveness of our advertising delivery, tracking and reporting systems; and
    
    our ability to adapt, including technologically, to new forms of Internet advertising.
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The loss of one or more significant advertisers could adversely affect our revenues
  Our operations could be disrupted by unexpected network interruptions caused by system
failures, natural disasters or unauthorized tampering of our systems
  
    
    system failures and outages caused by fire, floods, earthquakes,
tsunamis, power loss, telecommunications failures and similar events;
    
    software errors; computer viruses, break-ins and similar disruptions
from unauthorized tampering with our computer systems;
    
    security breaches related to the storage and transmission of
proprietary information, such as credit card numbers or other personal
information; and
    
    terrorist acts
   13




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We may lose a significant portion of our assets if banks in India collapse.
  We may not benefit from our acquisitions and investments and our acquired businesses could
increase our net losses
  
    
    the failure to identify operating weaknesses of the acquired business
during the course of due diligence and negotiations of these
transactions;
    
    the difficulty of assimilating the operations, third-party
relationships and personnel of the acquired companies with our
operations;
    
    Diversion of management time and focus from operating our business to
acquisition integration process;
    
    the difficulty of incorporating acquired technology, software or
content into our products, and unanticipated expenses related to such
integration;
    
    the impairment of relationships with employees and customers as a
result of any integration of new management personnel;
    
    The potential unknown liabilities associated with acquired businesses;
    
    The failure to develop successfully new products or technologies;
    
    The failure to popularize such products or technologies and/or derive
expected revenues therefrom;
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
    
    unfavorable changes in business environment and government regulations;
    
    unfavorable changes in accounting rules and guidelines relating to our acquisitions; and
    
    the failure of companies in
which we invest to raise sufficient capital to maintain their business.
    
    Cultural challenges
associated with integrating employees from the acquired company into our organization
    
    Retention of employees from the businesses we acquire.
    
    Litigation or other claims in connection with the acquisition or
investment, including claims from terminated employees, customers,
former stockholders, or other third parties.
  Our business and growth will be impaired if we are unable to retain our existing key personnel
and hire additional skilled employees
  We are dependent on our agreements with mobile service providers for service delivery and fee
collection
  We rely on increased sales of, and high renewal rates for, our subscription and fee based
products and services
   15




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We depend on mobile operators to reach out to their customers
  Potential liability for information we publish may require us to defend against legal claims,
which may cause significant operational expenditures
   We may be liable to third parties for information uploaded on or retrieved from our website
     
    
    unsolicited e-mail;
    
    lost or misdirected e-mail;
    
    illegal or fraudulent use of e-mail; 
    
    interruptions or delays in e-mail service; and
    
    loss or deletion of data stored in mailboxes.
  16




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If we are unable to provide innovative search experiences and other services that generate
significant traffic to our Websites, our business could be harmed, causing our revenues to decline.
  We may be liable to third parties for the products they purchase online
     17




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Privacy concerns may prevent us from selling demographically targeted advertising in the
future and make us less attractive to advertisers
    Indian and/or overseas regulators and other telecommunications operators may challenge our
ability to offer a PC-to-PC voice facility as one of the features of our Rediff BOL instant
messenger service
  We may not be able to manage our operations effectively if we grow, which could harm our
business
   18




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Currency exchange rate fluctuations may adversely impact our operating results and financial
condition
   If we are unable to develop new services or enhance existing services in anticipation of our
users needs, our users level of engagement with our services may decline and our business could
suffer as a result.
  A small group of our existing shareholders control our Company and may have interests which
conflict with those of our other shareholders or owners of our ADSs
   
    
    amending our Articles of Association;
    
    issuing additional shares of capital stock, except for pro rata issuance to existing shareholders;
    
    commencing any new line of business; and
    
    commencing liquidation.
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The laws of India do not protect intellectual property rights to the same extent as those of
the United States, and we may be unsuccessful in protecting our intellectual property rights, which
could lead to a reduction in our revenues and an increase in our expenses
     The limited installed personal computer base in India limits our pool of potential customers
and restricts the growth of our business
  The success of technological infrastructure and consumer base for our products and services
depends on the acceptance of the Internet in India, which may be slowed by cost and affordability
issues, technical obstacles and unfavorable Government policies
   20




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The success of our e-commerce platform depends on its acceptance and growth in India, which is
uncertain
  
    
    inconsistent quality of service;
    
    lack of legal infrastructure relating to e-commerce in India;
    
    lack of security of commercial data such as credit card numbers;
    
    low number of Internet users in India; and
    
    low levels of credit card penetration in India.
  Compliance with corporate governance and public disclosure requirements may increase our costs
of compliance
   21




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Risks Related to Investments in Indian Companies
  Terrorist attacks and other acts of violence or war involving India, the United States, and
other countries could adversely affect the financial markets, result in a loss of business
confidence and adversely affect our business, results of operations and financial condition
  If communal disturbances or riots erupt in India, or if regional hostilities increase, this
would adversely affect the Indian economy, the health of which our business depends upon
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Future political instability in India could halt or delay the liberalization of the Indian
economy and adversely affect economic conditions in India generally and our business in particular
   Indian law limits our ability to raise capital and the ability of others to acquire us, which
could prevent us from operating our business or entering into a transaction that is in the best
interests of our shareholders
   Our ability to acquire companies organized outside of India may depend on the approval of the
Government of India and the Reserve Bank of India. Our failure to obtain approval for acquisitions
of companies organized outside India may restrict our growth, which could negatively affect our
revenues
   23




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Statistical and third-party data in this document and documents incorporated by reference
herein may be incomplete or unreliable
  It may be difficult for you to enforce any judgment obtained in the United States against us
or our affiliates
  
    
    effect service of process upon us outside India or these persons
outside the jurisdiction of their residence; or
    
    enforce against us in courts outside of India or these persons outside
the jurisdiction of their residence, judgments obtained in U.S.
courts, including judgments predicated upon the federal securities
laws of the United States.
  
    
    was not rendered by a court of competent jurisdiction;
    
    was not rendered on the merits of the case;
    
    appears on the face of the proceedings to be founded on an incorrect
view of international law or a refusal to recognize the law of India
in cases in which such law is applicable;
    
    was obtained in proceedings which are opposed to natural justice; or
    
    sustains a claim founded on a breach of any law in force in India.
  24




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Risks Related to the ADSs and Our Trading Market
 An active or liquid market for our ADSs is not assured
   Currently there is no public trading market for our Equity Shares in India or elsewhere which,
together with existing Indian laws that restrict the conversion of outstanding equity shares into
ADSs, reduce your ability to sell our Equity Shares represented by ADSs
   
    
    if the consideration payable for the transfer does not exceed Rs.2.0
million, at a price mutually agreed upon by the seller and the buyer,
based on any recognized valuation methodology currently in use, on
submission of a certificate from the statutory auditors of the Indian
company whose equity shares are proposed to be transferred, regarding
the valuation of such equity shares; and
    
    if the consideration payable for the transfer exceeds Rs.2.0 million,
at a price arrived at, at the sellers option, in any of the following
manners, namely: (i) a price based on earnings per share (EPS linked
to the Price Earning (P/E) multiple), or a price based on the Net
Asset Value (NAV) linked to book value multiple, whichever is
higher; or (ii) a price which is the lower of the two independent
valuations of the equity shares being transferred, one prepared by the
statutory auditors of the company and the other by a Chartered
Accountant or a Merchant Banker in Category 1 registered with
Securities and Exchange Board of India.
 Our management has broad discretion in using the proceeds from our securities offerings and
cash from operations and therefore investors will be relying on the judgment of our management to
invest those funds effectively
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Our ADS market price is highly volatile and could drop unexpectedly in the future. Should our
ADS market price drop below $1.00, our ADSs may be delisted from the NASDAQ Global Market
   Owners of our ADSs may be restricted in their ability to exercise preemptive rights and
thereby may suffer future dilution of their ownership position
  Owners of our ADSs may be restricted in their ability to exercise voting rights because of the
practical and legal limitations associated with instructing our Depositary to vote on your behalf
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We do not plan to pay dividends in the foreseeable future
  We may be classified as a passive foreign investment company for United States federal income
tax purposes, which could subject United States investors in the ADSs or Equity Shares to adverse
tax consequences
  Sales of substantial amounts of securities in the public market could depress the price of our
ADSs and could impair our ability to raise capital through the sale of additional Equity Shares
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We may be required to list our Equity Shares on an Indian stock exchange. If we were to list
our Equity Shares on an Indian stock exchange, conditions in the Indian securities market may
affect the price or liquidity of our Equity Shares
      28




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BUSINESS
 Overview
       Our Markets
   29




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Our Opportunity
  
    
    We are an early entrant in the Indian internet market and our
brand is recognized and trusted by Indian Internet users;
 
    
    We offer services based on contemporary technology, thus making
them easy to use and accessible through both PCs and mobile
phones.
 
    
    We are one of the few Internet companies in India offering
complete website services, such as e-mail, search, community,
instant messaging, blogs, news and online shopping;
 
    
    Anticipated improvement in broadband access, online payment
infrastructure, distribution and fulfillment facilities, and
increase in credit and debit card penetration rates and the
development of alternative payment mechanisms for online
purchases, such as cash on deliveries is expected to fuel the
growth of e-commerce in India; and
 
    
    Expected growth over time in internet access through mobile
phones, further fueled by the issue of 3G licenses in India
recently.
  30




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Our Strategy
  
    
    Online advertising services on our Rediff.com website, revenues
from which currently account for a significant portion of our
India Online business. These include banner advertising,
performance based advertising, e-mail and text link campaigns
sponsorship of online events and rich media ad formats. Our target
client base for advertising and sponsorships include global
companies doing business in India, domestic corporations and small
and medium enterprises.
 
    
    Our Rediff Local Search platform, an advertising service for
small and local advertisers which is currently being enhanced to
cater to the location based search market. Users can post and view
local ads on both personal computers as well as mobile phones. We
have added a number of points of interest on our maps. Our
technology can sense the location of the user based on his/her IP
address so that the search results are relevant even if the user
has not specified his location. We have also refined the query
understanding engine to enable auto-categorization of the query
using new algorithms. We expect to grow our user base for this
service over the next year.
 
    
    Community and social networking platforms which connect people
through an online network. In the past year, we have concentrated
on socially enabling many parts of our website. These initiatives
are centered around a MyPage for each user of our service. Other
community products and platforms includeGet Ahead Q&A and Rediff
Blogs. We believe our video, audio and photo-sharing platform,
iShare, is a leader in its category. We are also a leading
provider of free e-mail communication services which are provided
in many Indian languages.
 
    
    News and information services, including breaking news, our money
channel Moneywiz as well as message boards for users to post their
opinions, a facility for users to personalize news to suit their
interests and periodic newsletters they can receive in their
e-mail boxes. Our news and information channels cover politics,
business, entertainment and sports.
 
    
    Mobile value added services, include facilities for downloading
ringtones, mobile games, wallpapers, chat and e-mail. We provide
these services for 2G, 2.5G and 3G mobile services.
 
    
    Services for small and medium businesses such as webhosting,
domain name registration are offered on a subscription basis.
 
    
    Search services, including web search facilities as well as
services to locate local information on domestic airfares, train
fares, job listings, images and products.
 
    
    Online shopping services, includes a platform for merchants in
India to create online shops, for consumers to explore the wide
product range on our site, conveniently place orders track their
packages, and rate the merchants. We believe that not only do we
offer the widest range of payment options to our consumers but
also have one of the largest delivery coverage of any online
shopping sites in India. We have recently introduced the concept
of social shopping that allows merchants to have their own MyPage
to display products and interact with their customers.
 
    
    In the United States, publication of India Abroad and India in
New York, as well as providing online services to the Asian
Indian community.
  31




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##### Table of Contents



India Online Business
   Information and Content
    rd th
   Current affairs, Business and Finance, Movies,
Sports.
  32




---



##### Table of Contents



Community Features and Products
   E-mail
  
    
    Rediffmail, our flagship e-mail service, is provided free of
charge to our users. In fiscal 2009 we enabled integration of
feeds from social networking sites Orkut, Facebook and Linkedin
into the Rediffmail inbox, facilitating users to get updates of
their friends activities through Rediffmail. We have now
additionally made our interface more user friendly by providing
easy navigation to quickly perform actions like reading unread
mails, composing a new mail, deleting mails, accessing the
calendar and contacts. The service is also accessible on mobile
and works seamlessly on most mobile phones.
 
    
    Rediffmail Pro is a subscription e-mail service targeted at
business users. Rediffmail Pro offers small businesses the ability
to select and configure, subject to availability, e-mail
addresses. Subscribers are given five e-mail addresses and 1GB of
storage space, which can be allocated among different users and
increased without limitation at a small additional charge.
Rediffmail Pro also offers enhanced address book features and
superior virus and spam protection. Users may also access their
e-mail accounts using POP access through their Rediffmail Pro
accounts. Rediffmail Enterprise Pro is a web based e-mail service
primarily for companies with a significant number of agents/sales
associates/dealers.
 
    
    Rediff Business Solution is aimed at the small and medium
enterprise (SME) segment in India. Through this product, we
offer SMEs a range of web management services such as domain name
registration, web hosting and business e-mail. Features offered
include 100MB web hosting service, a choice of Windows or Linux
platforms, POP3 business e-mail service and the ability to
register domain names for up to ten years.
 
    
    For the small and medium enterprises, we are testing a new
paid push mail service. It enables small and medium enterprises to
have complete administrative control over the subscribed email
service and offer the same to their employees. The service is
offered at significantly lower price compared to other competing
services and works on a large variety of popular phones including
Nokia and Samsung.
 Instant Messaging
   33




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Blogs
  Social Networking
     Finance Channel
  Search Services
  
    
    Local Search, which allows users to search for location specific
products and services and allows individual advertisers to publish
their offerings free of cost from the internet or mobile. In
addition to the features mentioned earlier, we also offer a value
added service called Click to Call on this service which connects
the advertiser with the interested party on their mobile phones
free of cost for a period of 2 minutes.
  34




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##### Table of Contents




    
    Fare Search, which allows users to search for and compare
transportation fares. Features of Fare Search include the Lowest
Fare Finder search tool, which charts out the lowest price points
for up to 90 days. Fare search offerings include searching for
schedules, seat availability, fares for trains in the India
Railway System.
 
    
    Job Search, which allows users to search for jobs across multiple
job sites as well as private company and government job openings.
Job Search also includes a tool that allows human resource
consultants and recruiters to upload job vacancies, at no cost,
directly to the Job Search website. We also offer a free e-mail
alert feature that allows users to stay updated on the latest job
openings in their desired categories.
 
    
    Product Search, which allows users to search for and compare
product features and prices across major Indian cities. Product
Search features a Price history feature that enables users to
track prices of different products on a month-on-month basis.
 
    
    Video Search, we offer video search as part of our vertical search
offerings and this helps users to search and find videos from a
database of over two million online videos.
 
    
    Other search services, which include Image Search, Map Search,
Stock Search, Book Search and Ringtone Search. We also enhanced
our language search crawling technology to identify and reach more
Indian language websites. Our web search now also returns relevant
results from our News, Images, Maps, Shopping, Q&A and other
services.
 Mobile Value Added Services
  
    
    Downloads. Users can download ringtones, polyphonic ringtones,
logos, picture messages, wallpapers and games from our website. We
have introduced search of ringtones on mobile phones. Downloads
include popular Indian content, such as Indi-pop ringtones, Indian
cricket team logos and wallpapers featuring Bollywood movie stars.
In addition, users have the ability to customize and download
images of their choice.
 
    
    Contests. Users can participate in contests in which they can win
prizes by correctly answering questions sent to them by SMS. Users
are charged for the cost of each outgoing SMS message that
responds to a question.
 
    
    Services. We offer users a variety of mobile phone related
services by SMS, such as the ability to search, seek and interact
with other users, play interactive games, and receive jokes and
astrological predictions. Users are charged for the cost of each
outgoing SMS message requesting the service. We also provide
enterprise solutions through access to short code services on
keywords using 57333.
 
    
    News and Information. Users can stay updated on current events by
receiving cricket scores, news and stock quotes by an SMS message.
Users are charged for the cost of each outgoing SMS message
requesting the news and information. Information search of utility
services such as railways, air fares and travel visa application
and status of many countries is also made available on mobile
phones.
  35




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
    
    Subscription. Subscription based services have been introduced
where customers can choose to subscribe for a monthly/weekly/daily
and on demand service for receiving SMS based information, jokes,
or astrology related services as well as proprietary rediff
services such as email alerts, job alerts and stock alerts for a
fixed fee.
 
    
    E-mail and Instant Messaging. Rediffmail subscribers can receive,
read and reply to e-mails and instant messages by SMS. Users are
charged a fee for each outgoing SMS which contains the e-mail or
instant message.
 
    
    SMS Keywords:We have recently launched a new service through which advertisers can
purchase a specific keyword for a period of time. This keyword can be advertised in their
marketing campaigns and promotions. This allows advertisers, both large and small, to
reach out to and interact with the vast majority of the Indian consumers that have access
to a mobile phone at a very low cost,
  Online Shopping
      36




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Our Revenue Sources
  Online Advertising
    Fee-based services
     Our Infrastructure
 Technology
   37




---



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Online Advertising
    Online Shopping
    38




---



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Electronic Payments
    United States Publishing Business
  Rediff India Abroad website
  India Abroad
     39




---



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India in New York
  Competition
 Online
     Print
  Intellectual Property
   40




---



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Facilities
 India
   United States
   41




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Seasonality
  Legal Proceedings
 Action Relating to Access to Pornographic Material
 Sunil
N. Phatarphekar & Ors. v. Abhinav Bhatt and Ors.
  Actions Relating to Trademark Infringement
   42




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Actions Relating to Patent Infringement
 st th
   43




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Other proceedings
  Subsidiaries
    44




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
      Our reportable business segments are:
 
    
    India Online business, which primarily includes revenues from online
advertising and fee-based services. Online advertising includes
revenues largely from display and performance based advertising and to
a lesser extent from sponsorships. Fee-based services include revenues
from online shopping, subscription services and mobile value-added
services.
    
    US Publishing business, which primarily includes revenues from the
Rediff India Abroad website and revenues from the print newspapers
India Abroad and India in New York.
  45




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Critical accounting policies and the use of estimates
   Revenue Recognition
 India Online business
      46




---



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US Publishing business
   Allowances for doubtful accounts receivable and other recoverables
  Depreciation and amortization
  Goodwill
   47




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Current Trading and Business Outlook
        48




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Reclassifications of certain items within the consolidated financial statements
       Operating Results
 Results of our reportable business segments were as follows (amount in US$ million):
 2008
    
    
    2009
    
    
    2010India Online
    
    
    US Publishing
    
    
    
    
    
    
    India Online
    
    
    US Publishing
    
    
    
    
    
    
    India Online
    
    
    US PublishingBusiness
    
    
    Business
    
    
    Total
    
    
    Business
    
    
    Business
    
    
    Total
    
    
    Business
    
    
    Business
    
    
    TotalRevenues from
external customers:Advertising
    
    
    17.4
    
    
    
    8.0
    
    
    
    25.4
    
    
    
    14.0
    
    
    
    5.3
    
    
    
    19.3
    
    
    
    10.6
    
    
    
    3.8
    
    
    
    14.4Fee based services
    
    
    6.2
    
    
    
    0.6
    
    
    
    6.8
    
    
    
    5.7
    
    
    
    0.4
    
    
    
    6.1
    
    
    
    4.1
    
    
    
    0.3
    
    
    
    4.4Total revenues
    
    
    23.6
    
    
    
    8.6
    
    
    
    32.2
    
    
    
    19.7
    
    
    
    5.7
    
    
    
    25.4
    
    
    
    14.7
    
    
    
    4.1
    
    
    
    18.8Cost of revenues
    
    
    6.7
    
    
    
    3.0
    
    
    
    9.7
    
    
    
    7.5
    
    
    
    2.9
    
    
    
    10.4
    
    
    
    7.6
    
    
    
    2.5
    
    
    
    10.1Segment Results
    
    
    16.9
    
    
    
    5.6
    
    
    
    22.5
    
    
    
    12.2
    
    
    
    2.8
    
    
    
    15.0
    
    
    
    7.1
    
    
    
    1.6
    
    
    
    8.7
  49




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Fiscal Year Ended March 31, 2010 compared to Fiscal Year Ended March 31, 2009
 Revenues
  India Online business
  US Publishing business
   Cost of revenues
  India online business
    50




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US Publishing business
   Segment results
  India Online business
  US Publishing business
  Sales and marketing expenses
   Product development expenses
   51




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Depreciation and amortization expenses
  General and administrative expenses
  Goodwill impairment
  Long-lived assets impairment
  Foreign exchange gain or (loss)
  Other income (expenses), net
  Interest income
   52




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Equity in net earnings of affiliate
  Net income
  Fiscal Year Ended March 31, 2009 compared to Fiscal Year Ended March 31, 2008
 Revenues
  India Online business
  US Publishing business
  Cost of revenues
   53




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India online business
   US Publishing business
   Segment results
  India Online business
  US Publishing business
  Sales and marketing expenses
  Product development expenses
   54




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Depreciation and amortization expenses
  General and administrative expenses
  Goodwill impairment
  Long-lived assets impairment
  Foreign exchange gain or (loss)
  Other income (expenses), net
  Interest income
   55




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Investment impairment
  Miscellaneous Income
  Equity in net earnings of affiliate
  Net income
  Liquidity and Capital Expenditures
     Cash Flows
 For the Fiscal Year Ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Net cash generated from operating activities
    
    
    8,614,816
    
    
    
    4,940,766
    
    
    
    982,659Net cash used in investing activities
    
    
    (9,266,636
    )
    
    
    (6,899,815
    )
    
    
    (3,883,854
    )Net cash generated/(used) from financing activities
    
    
    32,851
    
    
    
    
    
    
    
    (3,106,447
    )Effect of exchange rate changes on cash
    
    
    6,105,359
    
    
    
    (11,552,468
    )
    
    
    5,176,783Net decrease in cash and cash equivalents
    
    
    (618,969
    )
    
    
    (1,959,049
    )
    
    
    (6,007,642
    )
  56




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Fiscal Year Ended March 31, 2010
     Fiscal Year Ended March 31, 2009
    Fiscal Year Ended March 31, 2008
    57




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Contractual Obligations
  Operating leases
    
    
    Capital commitmentsYear ended March 31,
    
    US$
    
    
    US$2011
    
    
    321,192
    
    
    
    88,6392012
    
    
    211,231
    
    
    
    2013
    
    
    199,617
    
    
    
    2014
    
    
    211,450
    
    
    
    2015
    
    
    217,794
    
    
    
    and there after
    
    
    734,128
    
    
    
    Total payments
    
    
    1,895,412
    
    
    
    88,639
 Capital Expenditures
   Dividends
    58




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Income Tax Matters
  2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Income (loss) before income taxes and equity in net
earnings of affiliates
    
    
    5,341,606
    
    
    
    (11,084,921
    )
    
    
    (7,575,383
    )Indian statutory income tax rate
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.99
    %Expected income tax expense (benefit)
    
    
    1,815,612
    
    
    
    (3,767,765
    )
    
    
    (2,574,873
    )Tax effect of:-Adjustments to reconcile expected income tax expense
to reported income tax expenseEmployee stock-based compensation
    
    
    638,221
    
    
    
    395,857
    
    
    
    283,210Goodwill impairment
    
    
    
    
    
    
    1,806,229
    
    
    
    Change in valuation allowance
    
    
    (415,016
    )
    
    
    1,545,471
    
    
    
    2,401,938Gain on sale of investment taxed at capital gains rate
    
    
    (663,050
    )
    
    
    
    
    
    
    Tax in foreign jurisdictions
    
    
    (964,584
    )
    
    
    1,010
    
    
    
    (149,127
    )Others
    
    
    22,191
    
    
    
    59,198
    
    
    
    68,852Income tax expense
    
    
    433,374
    
    
    
    40,000
    
    
    
    30,000
    Market Risks
 Foreign Currency Exchange Rate Risk
   As of March 31, 2010(in US$ thousands)Accounts payable in U.S. dollars
    
    
    2,575Accounts receivable in U.S. dollars, net of allowance
    
    
    627Cash balances held in U.S. dollars
    
    
    11Net foreign currency exchange exposure
    
    
    1,937
  59




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Interest Rate Risk
  Off-balance Sheet Arrangements
  New Accounting Pronouncements
 ( ) Accounting for Transfers of Financial
Assetsan amendment of FASB Statement No. 140.
 (formerly ) Amendments to FASB
Interpretation No.46 (R).
   60




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61




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MANAGEMENT
  Name
    
    Age
    
    PositionAjit Balakrishnan(1)(2)
    
    
    62
    
    
    Chairman and Managing DirectorJayesh Sanghrajka
    
    
    36
    
    
    Vice President FinanceDiwan Arun Nanda(1)(2)
    
    
    67
    
    
    DirectorSunil N. Phatarphekar(1)(2)(3)
    
    
    46
    
    
    DirectorAshok Narasimhan(1)
    
    
    62
    
    
    DirectorSridar Iyengar(1)(3)
    
    
    63
    
    
    DirectorRashesh C. Shah(1) (3)
    
    
    46
    
    
    Director
 (1)
    
    Member of the Board of Directors(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Audit Committee Ajit Balakrishnan
 Jayesh Sanghrajka
 Diwan Arun Nanda .
 Sunil N. Phatarphekar
 Ashok Narasimhan
  62




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Sridar A. Iyengar
 Rashesh Shah
 Board Composition
  
    
    Ajit Balakrishnan, Diwan Arun Nanda and Rediffusion Holdings
Private Limited (earlier called Rediffusion Advertising Private
Limited), are entitled to appoint and have appointed Mr.
Balakrishnan as Director on the Board and Chairman of Rediff.com
India Ltd. so long as they hold, singly or jointly, not less than
10.0% of the issued, subscribed and paid up capital of Rediff.com
India Ltd. Mr. Balakrishnan serves an indefinite term and is not
required to retire by rotation.
 
    
    The remaining directors on the Board of Directors are
non-permanent directors who are appointed by shareholders and
retire by rotation. Ashok Narasimhan and Rashesh Shah retired by
rotation and were re-elected by the shareholders at our last
annual general meeting held on September 30, 2009. Diwan Arun
nanda and Sunil Phaterphekar will retire by rotation at our next
Annual General Meeting of shareholders, which is scheduled to be
held on or before September 30, 2010.
    63




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Code of Ethics
   Audit Committee
   Audit Committee Financial Expert
  Compensation Committee
  NASDAQ Corporate Governance Requirements
   (i) Rule 5250(d)(2) and Rule 5250 (d)(3)  Distribution of quarterly and interim reports
   64




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(ii) Rule 5605(b)(1)  Independent Directors
  (iii) Rule 5605(b)(2)  Executive sessions of Independent Directors
  (iv) Rule 5605(d)  Compensation of Officers
    (v) Rule 5605(e)  Nomination of Directors
   65




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(vi) Rule 5620(c)  Quorum
  (vii) Rule 5620(b)  Solicitation of Proxies
   Employees
  As at March 31,Department
    
    2008
    
    
    2009
    
    
    2010Technology and Product Development
    
    
    89
    
    
    
    112
    
    
    
    106Sales and Marketing
    
    
    128
    
    
    
    92
    
    
    
    88Editorial
    
    
    74
    
    
    
    64
    
    
    
    67General & Administration
    
    
    35
    
    
    
    30
    
    
    
    32Creative
    
    
    15
    
    
    
    18
    
    
    
    16Production & Circulation
    
    
    8
    
    
    
    7
    
    
    
    7Total
    
    
    349
    
    
    
    323
    
    
    
    316
 Compensation
   66




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Name
    

Salary and other compensation (US$)Ajit Balakrishnan
    
    
    200,000
    (1)Joy Basu
    
    
    76,632
    (2)Jayesh Sanghrajka
    
    
    69,348Sridar A. Iyengar
    
    
    25,000
    (1)Sunil Phatarphekar
    
    
    20,000
    (1)
 (1)
    
    Each of Mr. Balakrishnan, Mr. Iyengar and Mr. Phatarphekar receive a
salary and/or other compensation from Rediff Holdings, Inc., our wholly-owned U.S.-incorporated
subsidiary, in their capacity as directors of Rediff Holdings, Inc.
None of them receive any salary from Rediff.com India Limited.(2)
    
    Resigned with effect from September 26, 2009 Employee Benefit Plans
 Employee Stock Option Plan 1999
    67




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Associate Stock Option Plan 1999
    2002 Stock Option Plan
   68




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2004 Stock Option Plan
    2006 Employee Stock Option Plan
   69




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2006 ADR Linked Employee Stock Option Plan
   Retirement Plans
 Gratuity
   70




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Fiscal Years ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Change in benefit obligationBenefit obligation at the beginning of the year
    
    
    198,777
    
    
    
    286,524
    
    
    
    288,136Actuarial (gain) loss
    
    
    12,708
    
    
    
    9,659
    
    
    
    (19,112
    )Service cost
    
    
    53,468
    
    
    
    60,933
    
    
    
    63,183Interest cost
    
    
    20,639
    
    
    
    28,214
    
    
    
    32,683Benefits paid
    
    
    (17,504
    )
    
    
    (27,888
    )
    
    
    (53,452
    )Effect of exchange rate changes
    
    
    18,436
    
    
    
    (69,306
    )
    
    
    38,186Benefit obligation at the end of the year
    
    
    286,524
    
    
    
    288,136
    
    
    
    349,624
  Fiscal Years ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Service cost
    
    
    53,468
    
    
    
    60,933
    
    
    
    63,183Interest cost
    
    
    20,639
    
    
    
    28,214
    
    
    
    32,683Recognized net actuarial (gain) loss
    
    
    12,708
    
    
    
    9,659
    
    
    
    (19,112
    )Net gratuity cost
    
    
    86,815
    
    
    
    98,806
    
    
    
    76,754
  Fiscal Years ended March 31,2008
    
    2009
    
    2010Discount rate
    
    
    9.25
    %
    
    
    9.00
    %
    
    
    9.10
    %Rate of increase in compensation
    
    10% for first 4
years and 7%
thereafter
    
    10% for first 3
years and 7%
thereafter
    
    10% for first 2
years and 7% thereafter
 Provident Fund
  Compensated Absences
   71




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RELATED PARTY TRANSACTIONS
  Repurchase of equity shares
  Advertising and Mobile Revenues
  Product Development Expenses
   Purchase of Convertible Promissory Note and Interest thereon
   As of March 31,2009
    
    
    2010US$
    
    
    US$Account receivable for advertising revenues
    
    
    
    
    
    
    154,852Convertible promissory notes and accrued interest thereon
    
    
    
    
    
    
    1,316,919
  72




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EXCHANGE CONTROLS
 Restrictions on Conversion of Rupees
    Restrictions on Sale of the Equity Shares Underlying the ADSs and for Repatriation of Sale Proceeds
   73




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Restriction on Foreign Ownership and
Indian Securities
  An Active or Liquid Market for Our ADSs is Not Assured
  Restriction on Debt Issues
   
    
    All-in cost ceiling does not exceed 300 basis points over the
six-month LIBOR for the respective currency of borrowing, in the
case of ECBs with a minimum average maturity of three to five
years, and 500 basis points over the six-month LIBOR for the
respective currency of borrowing, in the case of ECBs with a
minimum average maturity of more than five years. Borrowers
proposing to avail of ECBs beyond the permissible all-in-cost
ceilings must seek prior RBI approval.
 
    
    Proceeds from ECBs may only be raised for permitted purposes, such
as capital investments, overseas direct investment in a joint
venture or a wholly-owned foreign subsidiary. ECB proceeds cannot
be used for on-lending, for investing in capital markets and real
estate, for working capital and general corporate purposes or for
refinancing existing domestic loans.
  74




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##### Table of Contents




    
    ECBs may be secured by assets of the borrower subject to
compliance with the relevant regulations issued by the Reserve
Bank of India.
 
    
    Pre-payment or redemption of ECBs prior to maturity in amounts up
to US$500 million is permitted without prior Reserve Bank of India
approval, provided that any such prepayment and redemption can
only be undertaken if the same complies with the stipulated
average maturity period of three years, in the case an ECB of up
to US$20 million, and five years, in the case of an ECB of up to
US$500 million.
 
    
    Preference shares and convertible debentures that are not
mandatorily and fully convertible into equity shares would be
treated as ECBs for all purposes under the law.
    Fungibility of ADSs
  
    
    the shares of the Indian company are purchased on a recognized stock exchange in India;
    
    the shares of the Indian company are purchased on a recognized stock exchange with the
permission of the domestic custodian for the ADSs and such shares are deposited with the
custodian after purchase;
    
    the Indian company has authorized the custodian to accept shares from non-resident
investors for
re-issuance of ADSs;
    
    the number of shares of the Indian company so purchased does not exceed the ADSs
converted
into underlying shares; and
    
    compliance with the provisions of the ADR Scheme and the guidelines issued thereunder.
  75




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Sponsored ADR Schemes
  
    
    The facility to sell the shares would be available pari passu to all categories of shareholders.
 
    
    The sponsoring company whose shareholders propose to divest
existing shares in the overseas market through issue of ADRs will
give an option to all its shareholders indicating the number of
 shares to be divested and mechanism how the price will be
determined under the ADR norms. If the shares offered for
divestment are more than the pre-specified number to be divested,
 shares would be accepted from the existing shareholders in
proportion to their existing shareholdings.
 
    
    The proposal for divestment of the shares would have to be
approved by a special resolution of the Indian company.
 
    
    The proceeds of the ADR issue raised abroad shall be repatriated
into India within a period of one month from the closure of the
issue. However, the proceeds of the ADR issue can also be retained
abroad to meet the future foreign exchange requirements of the
company.
  76




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TRADING MARKET
 General
    Annual and Quarterly high-low price history:
 Price Per ADS(in U.S. dollars)High
    
    
    LowFiscal year ended March 31, 2006
    
    
    33.75
    
    
    
    6.07Fiscal year ended March 31, 2007
    
    
    25.00
    
    
    
    11.16Fiscal year ending March 31, 2008
    
    
    27.50
    
    
    
    6.46Fiscal year ending March 31, 2009First Quarter (April 2008 to June 2008)
    
    
    9.77
    
    
    
    6.19Second Quarter (July 2008 to September 2008)
    
    
    7.71
    
    
    
    4.00Third Quarter (October 2008 to December 2008)
    
    
    4.19
    
    
    
    1.90Fourth Quarter (January 2009 to March 2009)
    
    
    2.38
    
    
    
    1.40Fiscal year ending March 31, 2010First Quarter (April 2009 to June 2009)
    
    
    4.50
    
    
    
    1.75Second Quarter (July 2009 to September 2009)
    
    
    3.99
    
    
    
    2.16Third Quarter (October 2009 to December 2009)
    
    
    3.84
    
    
    
    2.50Fourth Quarter (January 2010 to March 2010)
    
    
    2.98
    
    
    
    2.25Fiscal year ending March 31, 2011First Quarter (April 2010 to June 30, 2010)
    
    
    3.42
    
    
    
    1.97Second Quarter (July 2010 to September 01, 2010
    
    
    2.25
    
    
    
    1.69
 Monthly high-low price history for previous six months:
 Price Per ADS(in U.S. dollars)Previous six months
    
    High
    
    
    LowMarch 2010
    
    
    2.84
    
    
    
    2.25April 2010
    
    
    3.42
    
    
    
    2.62May 2010
    
    
    2.99
    
    
    
    2.05June 2010
    
    
    2.28
    
    
    
    1.86July 2010
    
    
    2.05
    
    
    
    1.69August 2010
    
    
    2.25
    
    
    
    1.77
  77




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RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
    ADR Guidelines
   Foreign Direct Investment
     78




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Transfer of Shares of an Indian company by a Person Resident outside India
       (i)
    
    investments in excess of specified sectoral caps or in sectors in which foreign direct
investment is not permitted or in sectors which specifically require approval of the FIPB;
 (ii)
    
    investment by any foreign investor who has or had any existing joint venture or technology
transfer or trademark agreement in India in the same field as the Indian company in which the
foreign direct investment is proposed. However, no prior approval is required if:
 (a)
    
    the investor is a venture capital fund registered with SEBI,(b)
    
    in the existing joint venture, investment by either of the parties is less
than 3%, or
  79




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(c)
    
    the existing joint venture or collaboration is either defunct or a sick
industrial company; In so far as joint ventures entered into after January 12, 2005,
the joint venture agreement may include a conflict of interest clause to help
safeguard the interests of the joint venture partners in the event one of the partners
desires to set up another joint venture or a wholly-owned subsidiary in the same field
of economic activity.
 (iii)
    
    The activity of the issuer company does not require an industrial license under the
provisions of the Industries (Development & Regulation) Act, 1951 or under the location policy
notified by Government of India under the Industrial Policy of 1991, as amended from time to
time.
 (iv)
    
    All proposals relating to the acquisition of existing shares of an Indian company by a
foreign investor (including a non-resident Indian) beyond specified sectoral caps or in
sectors in which FDI is not permitted or in case such proposals do not comply with certain
RBI pricing guidelines.
   (i)
    
    business of chit fund;(ii)
    
    nidhi company;(iii)
    
    agricultural or plantation activities;(iv)
    
    real estate business or construction of farm houses; or(v)
    
    trading in Transferable Development Rights (TDRs).
   a)
    
    retail trading;b)
    
    atomic energy;c)
    
    lottery business;d)
    
    gambling and betting; ande)
    
    agriculture (excluding floriculture, horticulture, development of seeds,
animal husbandry, pisiculture and cultivation of vegetables, mushrooms etc. under
controlled conditions and services related to agro and allied sectors) and plantations
(other than tea plantations).
  80




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Pricing
     Portfolio Investment by Non-Resident Indians
  which were formerly classified as Overseas Corporate Bodies
  81




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##### Table of Contents



Portfolio Investment by Foreign Institutional Investors
    
    
    a public offer, where the price of the shares to be issued is not
less than the price at which the shares are issued to the
residents; or
    
    by way of a private placement, where 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.
  (a)
    
    any entity incorporated in a jurisdiction that requires filing of
constitutional and/or other documents with a registrar of companies or comparable
regulatory agency or body under the applicable legislation in that jurisdiction;(b)
    
    any entity that is regulated, authorized or supervised by a central bank or
any other similar body in any country, state or authority, provided that the entity
must not only be authorized but also be regulated by the aforesaid;
  82




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(c)
    
    any entity that is regulated, authorized or supervised by a securities or
futures commission in any country, state or territory;
 (d)
    
    any entity that is a member of a self-regulating securities or futures
authority or commission within any country, state or territory, provided that the
aforementioned organizations which are in the nature of self-regulating organizations
are ultimately accountable to their respective securities or financial markets
regulators; and
 (e)
    
    any individual or entity (such as a fund, trust, collective investment
scheme, investment company or limited partnership) whose investment advisory function
is managed by an entity satisfying the criteria of (a), (b), (c) or (d) above.
    Takeover and Insider Trading Regulations
   83




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Qualified Institutional Placement under the SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009
  
    
    Issuers. A company whose equity shares are listed on an Indian
stock exchange with nationwide trading terminals and which is in
compliance with the prescribed requirements of minimum public
shareholding in its listing agreement will be eligible to raise
funds in the domestic market by placing securities with Qualified
Institutional Buyers, or QIBs.
  
    
    Public financial institution as defined in Section 4A of the Companies Act;
 
    
    Scheduled commercial banks;
 
    
    Mutual funds;
 
    
    FIIs and sub-account (other than a sub-account which is a foreign
corporate or foreign individual) registered with SEBI;
 
    
    Multilateral and bilateral development financial institutions;
 
    
    Venture capital funds registered with SEBI;
 
    
    Foreign venture capital investors registered with SEBI;
 
    
    State industrial development corporations;
 
    
    Insurance companies registered with the Insurance Regulatory and
Development Authority;
 
    
    Provident funds with minimum corpus of Rs.250 million;
 
    
    Pension funds with minimum corpus of Rs.250 million; or National
Investment Fund set up by the Government of India.
 
    
    Securities: Securities which can be issued through the QIP program
are equity shares, non-convertible debt instruments along with
warrants and convertible securities other than warrants
(hereinafter referred to as eligible securities). A security
which is convertible into or exchangeable with equity shares at a
later date, may be converted or exchanged into equity shares at
any time after allotment of security but not later than sixty
months from the date of allotment. The eligible securities must be
fully paid up at the time of allotment.
 
    
    Investors/Allottees: The specified securities can be issued only
to QIBs, as defined above. Such QIBs must not be promoters or
related to promoters of the issuer, either directly or indirectly.
Each placement of the eligible securities issued through the QIP
program shall be on a private placement basis, in compliance with
the requirements of the Companies Act and the SEBI (Issue of
Capital and Disclosure Requirements) Regulations, 2009. A minimum
of 10% of the securities in each placement must be allotted to
mutual funds. If no mutual fund agrees to take up the minimum
portion or any part thereof, such minimum portion or part thereof
may be allotted to other QIBs.
 
    
    Issue Size: The aggregate funds that can be raised through the QIP
program in one financial year shall not exceed five times of the
net worth of the issuer as of the end of its previous financial
year.
 
    
    Placement Document: The issuer shall prepare a placement document
containing all the relevant and material disclosures. There will
be no pre-issue filing of the placement document with SEBI. The
placement document will be placed on the websites of the relevant
Indian stock exchanges and of the issuer, with appropriate
disclaimer to the effect that the placement is meant only for QIBs
on a private placement basis and is not an offer to the public.
 
    
    Pricing: The price of the shares issued under the QIP program must
not be less than the average of the weekly high and low of the
closing prices of the shares quoted on the stock exchange during
the two weeks preceding the relevant date. Relevant date has
been defined to mean the date of the meeting in which the Board of
the company or the Committee of Directors duly authorized by the
Board of the company decides to open the proposed issue. The issue
price is subject to adjustment in case of corporate actions such
as stock splits, rights issues and bonus issues.
   84




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PRINCIPAL SHAREHOLDERS
  
    
    each of the executive officers named in the summary compensation
table and each of our directors;
 
    
    all of our directors and executive officers as a group; and
 
    
    each person or group of affiliated persons who is known by us to
beneficially own 5.0% or more of our Equity Shares.
 Shares Beneficially
    
    
    Shares Beneficially
    
    
    Shares BeneficiallyOwned
    
    
    Owned
    
    
    OwnedAs of June 30, 2010
    
    
    As of May 29, 2009
    
    
    As of August 6, 2008Number of
    
    
    Percent of
    
    
    Number of
    
    
    Percent of
    
    
    Number of
    
    
    Percent ofEquity
    
    
    total Equity
    
    
    Equity
    
    
    total Equity
    
    
    Equity
    
    
    total EquityName of Beneficial
    
    Shares
    
    
    Shares
    
    
    Shares
    
    
    Shares
    
    
    Shares
    
    
    SharesOwner
    
    held
    
    
    outstanding
    
    
    held
    
    
    outstanding
    
    
    held
    
    
    outstandingOfficers and DirectorsAjit Balakrishnan (1)(1A)
(1B) (1C) (1D)
    
    
    3,463,982
    
    
    
    23.70
    %
    
    
    3,463,982
    
    
    
    23.70
    %
    
    
    3,463,982
    
    
    
    23.70
    %Diwan Arun Nanda(1)
    
    
    3,444,742
    
    
    
    23.57
    %
    
    
    3,444,742
    
    
    
    23.57
    %
    
    
    3,444,742
    
    
    
    23.57
    %All Directors and Officers as
a Group
(2 persons)
    
    
    4,720,722
    
    
    
    32.08
    %
    
    
    4,720,722
    
    
    
    32.08
    %
    
    
    4,720,722
    
    
    
    32.08
    %Other Shareholders holding more
than 5% shareholdingRediffusion Holdings Private
Limited(1)
    
    
    2,200,002
    
    
    
    15
    %
    
    
    2,200,002
    
    
    
    15
    %
    
    
    2,200,002
    
    
    
    15
    %Draper-India International
    
    
    2,200,000
    
    
    
    15
    %
    
    
    2,200,000
    
    
    
    15
    %
    
    
    2,200,000
    
    
    
    15
    %Queenswood Investments Ltd
    
    
    
    
    
    
    
    
    
    
    2,008,000
    
    
    
    14
    %
    
    
    2,008,000
    
    
    
    14
    %Edwlweiss Finance and
Investment Limited
    
    
    1,258,000
    
    
    
    9
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rediff.com India limited
Employee Trust (1D)
    
    
    750,000
    
    
    
    5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  (1)
    
    Includes 2,200,002 Equity Shares held by Rediffusion Holdings Private
Limited, previously called Rediffusion Advertising Private Limited, of
which Ajit Balakrishnan is a 50.0% shareholder and Director and Diwan
Arun Nanda is a 50.0% shareholder and Director.(1A)
    
    Includes 144,540 Equity Shares held by Quintrol Technologies Private
Limited, of which Ajit Balakrishnan is a director as well as a 99.9%
stockholder.(1B)
    
    Includes 5,300 ADSs of the Company held by Mr. Ajit Balakrishnan.  85




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##### Table of Contents



(1C)
    
    Includes 33,200 ADSs of the Company held by A B Technologies, LLC a
New York limited liability company, with respect to which Mr.
Balakrishnan holds a position as the Managing Member as well as 99.9%
stockholder.(1D)
    
    The trustees of the trust consist of 3 executive officers of Rediff. Mr. Balakrishnan in his
capacity as the Chairman of Rediff has the power to remove and appoint the trustees of the trust,
and therefore may be deemed to be the beneficial owner of the shares owned by the trust. Mr.
Balakrishnan disclaims beneficial ownership of the shares owned by the trust.      86




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##### Table of Contents



TAXATION
 Indian Tax
  The following summary is not intended to constitute a complete analysis of the tax
consequences under Indian law of the acquisition, ownership and sale of our ADSs and our Equity
Shares by non-resident investors. 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 Indian law, the law of the jurisdiction of their residence, any tax
treaty between India and their country of residence, and in particular the application of the
regulations implementing the Section 115AC regime.
 Residence
  Taxation of Distributions
  Taxation on Sale of ADSs
   87




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Taxation on Redemption of ADSs
    Taxation on Sale of Equity Shares
      88




---



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Rights
   Stamp Duty
   89




---



##### Table of Contents



Other Taxes
  Service Tax
  United States Federal Income Tax Considerations
      90




---



##### Table of Contents



General
     Distributions
   91




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##### Table of Contents



Sale or Other Disposition of ADSs or Equity Shares
  Passive Foreign Investment Company
   
    
    the gain or excess distribution would be allocated ratably over your
holding period for ADSs or Equity Shares;
    
    the amount allocated to the taxable year in which the gain or excess
distribution was realized, and any taxable year prior to the first
taxable year that you held our ADSs or our Equity Shares in which we
are classified as a PFIC (a pre-PFIC year), would be taxable as
ordinary income; and
    
    the amount allocated to each prior year, other than the current year
and any pre-PFIC year, would be subject to (i) tax at the highest tax
rate in effect for that year and (ii) an interest charge generally
applicable to underpayments of tax based on the amount of the tax
deferred during the time in which you owned ADSs or Equity Shares.
  92




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93




---



##### Table of Contents



CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
    94




---



##### Table of Contents



Changes in Internal Controls over Financial Reporting
   95




---



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PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fiscal year ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Audit Fee
    
    
    224,070
    
    
    
    160,448
    
    
    
    159,717Audit-Related Fees
    
    
    
    
    
    
    
    
    
    
    29,617Tax Fees
    
    
    23,620
    
    
    
    16,476
    
    
    
    16,924
      96




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##### Table of Contents



PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASER
 MaximumTotal
    
    
    number (ornumber of
    
    
    approximateADS
    
    
    dollar value) ofpurchased as
    
    
    ADS that maypart of
    
    
    yet beTotal
    
    
    
    
    
    
    publicly
    
    
    purchasednumber of
    
    
    Average
    
    
    announced
    
    
    under theADS
    
    
    price paid
    
    
    plan or
    
    
    plans orPeriod
    

purchased (1)
    
    
    per ADS
    
    
    programs
    
    
    programsUS$
    
    
    
    
    
    
    US$Month # 12 (March 2010)
    
    
    1,500,000
    
    
    
    2.04
    
    
    
    
    
    
    
    5,538,325Total
    
    
    1,500,000
 (1)
    
    Our ordinary share to ADS ratio is one ordinary share for two ADS.(2)
    
    Our board of directors authorized US$8,861,320 under the share repurchase program on February
23, 2010.  97




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PRESENTATION OF FINANCIAL INFORMATION
    98




---



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ADDITIONAL INFORMATION
 Memorandum and Articles of Association
 Objectives and Purposes
  Description of Share Capital
  Share Capital
   Shareholder Rights Agreements
   99




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##### Table of Contents



Amended and Restated Shareholders Rights Agreement
  Registration Rights
  
    
    More than two such registrations or qualifications pursuant to
such demand registration rights;
 
    
    a registration or qualification prior to the earlier of December
31, 2002, or six months after the effective date of any Indian
law, regulation or other governmental order which allows our
Equity Shares to be offered to the public on an Indian stock
exchange; or
 
    
    a registration for a period not to exceed 120 days, if our Board
of Directors has made a good faith determination that such
registration would be detrimental to us or our shareholders.
  
    
    More than once in a twelve month period;
 
    
    unless the registration relates to securities that are valued in excess of US$1,000,000; or
 
    
    if our Board of Directors has made a good faith determination that
such registration would be detrimental to us or our shareholders.
  Other Rights
  Dividends
   100




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
    
    the rate of the dividend to be declared shall not exceed 10.0% of
the companys paid up capital or the average of the rate at which
dividends were declared by the company in the previous five years,
whichever is less;
 
    
    the total amount to be drawn from the accumulated profits earned
in the previous years and transferred to the reserves shall not
exceed an amount equivalent to 10.0% of the companys paid up
capital and free reserves, and the amount so drawn is to be used
first to set off the losses incurred in the fiscal year before any
dividends in respect of preference or equity shares are declared;
and
 
    
    the balance of reserves after withdrawals shall not fall below
15.0% of the companys paid up capital.
 Bonus Shares
  Preemptive Rights and Issue of Additional Shares
   101




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Annual General Meetings of Shareholders
    Voting Rights
       102




---



##### Table of Contents



Register of Shareholders; Record Dates; Transfer of Shares
      103




---



##### Table of Contents



Disclosure of Ownership Interest
  Audit and Annual Report
  Company Acquisition of Equity Shares
  Liquidation Rights
  Material Contracts
   104




---



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DOCUMENTS ON DISPLAY
  
      105




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EXHIBIT INDEX
 Exhibit No.
    
    Description of Document*1.1
    
    Articles of Association, as amended.*1.2
    
    Memorandum of Association, as amended.*1.3
    
    Certificate of Incorporation, as amended.*2.1
    
    Form of Deposit Agreement among Rediff.com, Citibank, N.A.,
and holders from time to time of American Depository Receipts
issued thereunder (including as an exhibit, the form of
American Depository Receipt).*2.2
    
    Rediff.coms specimen certificate for equity shares.*2.3
    
    Amended and Restated Shareholder Rights Agreement dated
February 24, 2000 between Rediff.com and the shareholders of
Rediff.com.*4.1
    
    1999 Employee Stock Option Plan.*4.2
    
    1999 Associate Stock Option Plan.***4.3
    
    2002 Stock Option Plan.****4.4
    
    2004 Stock Option Plan.*******4.5
    
    2006 Employee Stock Option Plan.********4.6
    
    2006 ADR Linked Employee Stock Option Plan.*4.7
    
    Form of Indemnification Agreement.*******4.8
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Sridar A. Iyengar.*******4.9
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Ashok Narasimhan.*******4.10
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Pulak Chandan Prasad.*******4.11
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Joy Basu.*4.12
    
    Sublease dated July 5, 1999 between Shreenathji Balaji
Computech Private Limited and Rediff.com.*4.13
    
    Letter Agreement dated December 28, 1998 between
Rediffusion-Dentsu, Young & Rubicam Limited and Rediff.com.*4.14
    
    Promoters Agreement dated January 9, 1996 between Ajit
Balakrishnan and Diwan Arun Nanda.**4.15
    
    Stock Purchase Agreement among Rediff.com, ValuCom and
shareholders of ValuCom dated March 21, 2001.**4.16
    
    Stock Purchase Agreement among Rediff.com, India Abroad and
shareholders of India Abroad dated March 21, 2001, as amended
on April 27, 2001.**4.17
    
    Amended and Restated Agreement and Plan of Reorganization
among Rediff.com, Thinkindia.com, Inc., Rediff Holdings, Inc.,
the principal stock holders of Think India and certain other
parties thereto dated February 27, 2001.*****4.18
    
    Agreement for sale of assets of Value Communications
Corporation dated April 8, 2004.******4.19
    
    Underwriting Agreement dated November 9, 2005 between
Rediff.com and Deutsche Bank Securities Inc.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 of Principal Executive Officer pursuant to 18.
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.13.2
    
    Certification of Principal Financial Officer pursuant to 18.
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.15.1
    
    Consent of Independent Registered Public Accounting Firm
  106




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##### Table of Contents



*
    
    Incorporated by reference to exhibits filed with the Registrants Registration Statement on Form F-1 (File No. 333-37376).*
    
    Incorporated by reference to exhibits filed with the Registrants Form 20-F for the fiscal year ended March 31, 2001.***
    
    Incorporated by reference to exhibits filed with the Registrants Form 20-F for the fiscal year ended March 31, 2003.****
    
    Incorporated by reference to exhibits filed with the Registrants Form S-8 filed on December 30, 2004.*****
    
    Incorporated by reference to exhibits filed with the Registrants Form 20-F for the fiscal year ended March 31, 2004.******
    
    Incorporated by reference to exhibits filed with the Registrants Form 6-K filed on November 9, 2005.*******
    
    Incorporated by reference to exhibits filed with the Registrants Form 20-F for the fiscal year ended March 31, 2006.********
    
    Incorporated by reference to exhibits filed with the Registrants Form 20-F for the fiscal year ended March 31, 2007.
    
    Filed herewith.  107




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INDEX TO FINANCIAL STATEMENTS
 Page(s)Reports of Independent Registered Public Accounting Firm
    
    
    F-2  F-3Consolidated Balance Sheets as of March 31, 2009 and 2010
    
    
    F-4Consolidated Statements of Operations for the years ended
March 31, 2008, 2009 and 2010
    
    
    F-5  F-6Consolidated Statements of Changes in Shareholders Equity for
the years ended March 31, 2008, 2009 and 2010
    
    
    F-7Consolidated Statements of Cash Flows for the years ended
March 31, 2007, 2008 and 2009
    
    
    F-8  F-9Notes to Consolidated Financial Statements
    
    
    F-10  F-36
  F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ DELOITTE HASKINS & SELLSChartered AccountantsMumbai, IndiaSeptember 20, 2010
  F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       /s/ DELOITTE HASKINS & SELLSChartered AccountantsMumbai, IndiaSeptember 20, 2010
  F-3




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED BALANCE SHEETS
 as of March 31, 2009 and 2010
 2009
    
    
    2010US$
    
    
    US$AssetsCurrent AssetsCash and cash equivalents
    
    
    45,521,173
    
    
    
    44,690,314Trade accounts receivable (net of allowances of
US$3,935,812 and US$4,128,829 as of March 31, 2009
and 2010, respectively)
    
    
    6,418,615
    
    
    
    5,807,994Prepaid expenses and other current assets (See Note 4)
    
    
    2,405,421
    
    
    
    1,745,564Total current assets
    
    
    54,345,209
    
    
    
    52,243,872Property, plant and equipment  net (See Note 5)
    
    
    7,925,807
    
    
    
    5,489,761Investments in equity method investees
    
    
    1,740,457
    
    
    
    1,873,672Goodwill (See Note 7)
    
    
    2,000,000
    
    
    
    2,000,000Recoverable taxes
    
    
    4,366,769
    
    
    
    5,115,727Other non-current assets (See Note 8)
    
    
    1,233,381
    
    
    
    2,817,855Total non-current assets
    
    
    17,266,414
    
    
    
    17,297,015Total assets
    
    
    71,611,623
    
    
    
    69,540,887Liabilities and Shareholders EquityLiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities (See Note 9)
    
    
    5,658,456
    
    
    
    6,794,991Customer advances and unearned revenues
    
    
    1,268,845
    
    
    
    1,366,336Total current liabilities
    
    
    6,927,301
    
    
    
    8,161,327Other non-current liabilities (See Note 10)
    
    
    677,323
    
    
    
    773,561Total liabilities
    
    
    7,604,624
    
    
    
    8,934,888Commitments and contingencies (See Note 24)Shareholders EquityEquity shares: par value  Rs.5, Authorized:24,000,000 equity shares as of March 31, 2009 and 2010;
 Issued and outstanding 14,615,800 and 13,865,800 equity shares as of March 31, 2009 and
2010, respectively
    
    
    1,735,105
    
    
    
    1,735,105Additional paid-in-capital
    
    
    127,014,384
    
    
    
    127,847,598Accumulated other comprehensive loss
    
    
    (10,746,318
    )
    
    
    (3,845,603
    )Accumulated deficit
    
    
    (53,996,172
    )
    
    
    (62,024,654
    )Treasury shares, at cost (See Note 11)
(Nil and 750,000 equity shares as of March 31, 2009
and 2010, respectively)
    
    
    
    
    
    
    (3,106,447
    )Total shareholders equity
    
    
    64,006,999
    
    
    
    60,605,999Total liabilities and shareholders equity
    
    
    71,611,623
    
    
    
    69,540,887
 See accompanying notes to consolidated financial statements
  F-4




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For each of the years ended March 31, 2008, 2009 and 2010
 2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$RevenuesIndia Online
    
    
    23,649,363
    
    
    
    19,707,381
    
    
    
    14,694,576U.S. Publishing
    
    
    8,599,840
    
    
    
    5,722,571
    
    
    
    4,148,685Total revenues
    
    
    32,249,203
    
    
    
    25,429,952
    
    
    
    18,843,261Cost of revenues (excluding depreciation and
amortization separately disclosed below)India Online
    
    
    6,660,616
    
    
    
    7,511,179
    
    
    
    7,654,344U.S. Publishing
    
    
    3,038,119
    
    
    
    2,864,552
    
    
    
    2,460,959Total cost of revenues
    
    
    9,698,735
    
    
    
    10,375,731
    
    
    
    10,115,303Operating expensesSales and marketing
    
    
    7,796,896
    
    
    
    5,876,851
    
    
    
    7,143,440Product development
    
    
    2,848,563
    
    
    
    2,686,066
    
    
    
    2,663,319Depreciation and amortization
    
    
    5,902,705
    
    
    
    6,248,129
    
    
    
    5,004,262General and administrative
    
    
    7,520,034
    
    
    
    8,027,980
    
    
    
    5,549,891Goodwill impairment (See Note 7)
    
    
    
    
    
    
    5,314,468
    
    
    
    Long-lived assets impairment (See Note 5)
    
    
    
    
    
    
    2,528,261
    
    
    
    136,878Foreign exchange (gain) loss, net
    
    
    601,137
    
    
    
    (92,393
    )
    
    
    (195,865
    )Total operating expenses
    
    
    24,669,335
    
    
    
    30,589,362
    
    
    
    20,301,925Operating loss
    
    
    (2,118,867
    )
    
    
    (15,535,141
    )
    
    
    (11,573,967
    )Other income (expense), netInterest income
    
    
    5,509,753
    
    
    
    4,515,997
    
    
    
    4,017,824Investment impairment
    
    
    
    
    
    
    (109,842
    )
    
    
    (65,556
    )Miscellaneous income
    
    
    1,950,720
    
    
    
    44,065
    
    
    
    46,316Total other income, net
    
    
    7,460,473
    
    
    
    4,450,220
    
    
    
    3,998,584
  F-5




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##### Table of Contents



2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Income (loss) before income taxes and equity in
net earnings of equity method investees
    
    
    5,341,606
    
    
    
    (11,084,921
    )
    
    
    (7,575,383
    )Income tax expense
    
    
    (433,374
    )
    
    
    (40,000
    )
    
    
    (30,000
    )Equity in net loss of equity method investees
    
    
    
    
    
    
    (133,209
    )
    
    
    (423,099
    )Net income (loss)
    
    
    4,908,232
    
    
    
    (11,258,130
    )
    
    
    (8,028,482
    )Weighted average number of equity shares  basic
    
    
    14,606,660
    
    
    
    14,615,800
    
    
    
    14,563,197Weighted average number of equity shares  diluted
    
    
    14,772,824
    
    
    
    14,615,800
    
    
    
    14,563,197(Loss) earnings per share  basic
    
    
    0.336
    
    
    
    (0.770
    )
    
    
    (0.552
    )(Loss) earnings per share  diluted
    
    
    0.332
    
    
    
    (0.770
    )
    
    
    (0.552
    )(Loss) earnings per ADS  (where 2 ADSs
represent 1 equity share)  basic
    
    
    0.168
    
    
    
    (0.385
    )
    
    
    (0.276
    )(Loss) earnings per ADS  (where 2 ADSs
represent 1 equity share)  diluted
    
    
    0.166
    
    
    
    (0.385
    )
    
    
    (0.276
    )
 See accompanying notes to consolidated financial statements
  F-6




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 For each of the years ended March 31, 2008, 2009 and 2010
 AccumulatedEquity shares
    
    
    
    
    
    
    other
    
    
    
    
    
    
    Treasury sharesEquity
    
    
    Additional
    
    
    comprehensive
    
    
    
    
    
    
    (Equity shares held by
    
    
    Total
    
    
    Comprehensiveshare
    
    
    paid-in-
    
    
    income
    
    
    Accumulated
    
    
    controlled trust)
    
    
    shareholders
    
    
    incomeNumber of
    
    
    capital
    
    
    capital
    
    
    (loss)
    
    
    deficit
    
    
    No of
    
    
    
    
    
    
    equity
    
    
    (loss)shares
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    shares
    
    
    US$
    
    
    US$
    
    
    US$Balance as of March 31, 2007
    
    
    14,603,800
    
    
    
    1,733,604
    
    
    
    123,942,398
    
    
    
    (806,979
    )
    
    
    (47,646,274
    )
    
    
    
    
    
    
    
    
    
    
    77,222,749Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,876,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,876,008Stock options exercised
    
    
    12,000
    
    
    
    1,501
    
    
    
    31,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,851Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,908,232
    
    
    
    
    
    
    
    
    
    
    
    4,908,232
    
    
    
    4,908,232Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,110,631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,110,631
    
    
    
    6,110,63111,018,863Balance as of March 31, 2008
    
    
    14,615,800
    
    
    
    1,735,105
    
    
    
    125,849,756
    
    
    
    5,303,652
    
    
    
    (42,738,042
    )
    
    
    
    
    
    
    
    
    
    
    90,150,471Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,164,628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,164,628Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,258,130
    )
    
    
    
    
    
    
    
    
    
    
    (11,258,130
    )
    
    
    (11,258,130
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,049,970
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,049,970
    )
    
    
    (16,049,970
    )(27,308,100
    )Balance as of March 31, 2009
    
    
    14,615,800
    
    
    
    1,735,105
    
    
    
    127,014,384
    
    
    
    (10,746,318
    )
    
    
    (53,996,172
    )
    
    
    
    
    
    
    
    
    
    
    64,006,999Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    833,214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    833,214Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,028,482
    )
    
    
    
    
    
    
    
    
    
    
    (8,028,482
    )
    
    
    (8,028,482
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,900,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,900,715
    
    
    
    6,900,715Repurchase of equity shares
for treasury (See Note 8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750,000
    )
    
    
    (3,106,447
    )
    
    
    (3,106,447
    )(1,127,767
    )Balance as of March 31, 2010
    
    
    14,615,800
    
    
    
    1,735,105
    
    
    
    127,847,598
    
    
    
    (3,845,603
    )
    
    
    (62,024,654
    )
    
    
    (750,000
    )
    
    
    (3,106,447
    )
    
    
    60,605,999
 See accompanying notes to consolidated financial statements
  F-7




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years ended March 31,
 2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Cash flows from operating activitiesNet income (loss)
    
    
    4,908,232
    
    
    
    (11,258,130
    )
    
    
    (8,028,482
    )Adjustments to reconcile net income (loss) to net cash generated from operating activities:Goodwill impairment
    
    
    
    
    
    
    5,314,468
    
    
    
    Long-lived assets impairment
    
    
    
    
    
    
    2,528,261
    
    
    
    136,878Investment impairment
    
    
    
    
    
    
    109,842
    
    
    
    65,556Equity in net earnings of equity method investees
    
    
    
    
    
    
    133,209
    
    
    
    423,099Depreciation and amortization
    
    
    5,902,705
    
    
    
    6,248,129
    
    
    
    5,004,262Allowances for doubtful trade accounts receivables
    
    
    848,111
    
    
    
    1,238,400
    
    
    
    (261,825
    )Gain on sale of investments
    
    
    (1,950,720
    )
    
    
    
    
    
    
    Loss (profit) on sale of property, plant and equipment
    
    
    (331
    )
    
    
    40,460
    
    
    
    7,314Stock-based compensation expense
    
    
    1,876,008
    
    
    
    1,164,628
    
    
    
    833,214Unrealized exchange loss
    
    
    
    
    
    
    97,482
    
    
    
    43,764Changes in assets and liabilities:Trade accounts receivable
    
    
    (2,208,394
    )
    
    
    2,503,586
    
    
    
    1,489,504Prepaid expenses and other current assets
    
    
    (1,504,958
    )
    
    
    135,986
    
    
    
    919,765Accounts payable, accrued liabilities and other liabilities
    
    
    2,527,823
    
    
    
    (800,326
    )
    
    
    352,412Customer advances and unearned revenues
    
    
    395,284
    
    
    
    (356,881
    )
    
    
    (35,878
    )Recoverable taxes
    
    
    (2,444,532
    )
    
    
    (1,874,723
    )
    
    
    (157,291
    )Other non-current assets
    
    
    265,588
    
    
    
    (283,625
    )
    
    
    190,367Net cash generated from operating activities
    
    
    8,614,816
    
    
    
    4,940,766
    
    
    
    982,659Cash flows from investing activitiesPayments to acquire property, plant and equipment
    
    
    (10,826,091
    )
    
    
    (5,313,138
    )
    
    
    (1,762,906
    )Purchase of investment in equity method investee
    
    
    
    
    
    
    (1,516,696
    )
    
    
    (407,018
    )Purchase of investments
    
    
    
    
    
    
    (109,842
    )
    
    
    Purchase of promissory notes
    
    
    (400,000
    )
    
    
    
    
    
    
    (1,750,000
    )Cash received from sale of investments
    
    
    1,950,720
    
    
    
    Proceeds from sale of property, plant and equipment
    
    
    8,735
    
    
    
    39,861
    
    
    
    36,070Net cash used in investing activities
    
    
    (9,266,636
    )
    
    
    (6,899,815
    )
    
    
    (3,883,854
    )
  F-8




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##### Table of Contents



2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Cash flows from financing activitiesNet proceeds from issue of equity shares
    
    
    32,851
    
    
    
    
    
    
    
    Repurchase of equity shares
    
    
    
    
    
    
    
    
    
    
    (3,106,447
    )Net cash provided by (used in) financing activities
    
    
    32,851
    
    
    
    
    
    
    
    (3,106,447
    )Net decrease in cash and cash equivalents
    
    
    (618,969
    )
    
    
    (1,959,049
    )
    
    
    (6,007,642
    )Cash and cash equivalents at the beginning of the year
    
    
    53,546,300
    
    
    
    59,032,690
    
    
    
    45,521,173Effect of exchange rate changes on cash
    
    
    6,105,359
    
    
    
    (11,552,468
    )
    
    
    5,176,783Cash and cash equivalents at the end of the year
    
    
    59,032,690
    
    
    
    45,521,173
    
    
    
    44,690,314Supplementary cash flow information:Income taxes paid
    
    
    1,551,462
    
    
    
    1,318,052
    
    
    
    1,051,768Supplementary disclosure of non cash investing activity:Payables for purchase of property, plant and equipment
    
    
    307,457
    
    
    
    545
    
    
    
    133,568
 See accompanying notes to consolidated financial statements
  F-9




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and business
    2. Significant accounting policies
 (a) Basis of preparation
  (b) Basis of consolidation
  (c) Investments in equity method investees
  (d) Use of estimates
   F-10




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##### Table of Contents



(e) Revenue recognition
 India Online business
        F-11




---



##### Table of Contents



US Publishing business
    (f) Costs and expenses
  Cost of revenues
   Sales and marketing
   F-12




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##### Table of Contents



Product development
  General and administrative
  (g) Cash and cash equivalents
   (h) Property, plant and equipment
  Furniture and fixtures
    
    10 yearsComputer equipment and software
    
    
    1 to 3 yearsOffice equipment
    
    
    3 to 10 yearsVehicles
    
    8 yearsLeasehold improvements
    
    6 yearsWebsite development costs
    
    3 years
   F-13




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##### Table of Contents



(i) Website development costs
  (j) Investments, at cost
  (k) Goodwill
     (l) Foreign currency
   F-14




---



##### Table of Contents



(m) Earnings per share
  (n) Income taxes
    (o) Impairment or disposal of long-lived assets (excluding goodwill)
   F-15




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##### Table of Contents



(p) Stock-based compensation
  (q) Allowances for doubtful trade accounts receivable
  (r) Compensated absences
  3. New Accounting Pronouncements
 ( ) Accounting for Transfers of Financial
Assetsan amendment of FASB Statement No. 140.
 (formerly ) Amendments to FASB
Interpretation No.46 (R).
   F-16




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##### Table of Contents



F-17




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##### Table of Contents



4. Prepaid Expenses and Other Current Assets
  As of March 31,2009
    
    
    2010US$
    
    
    US$Prepaid expenses
    
    
    950,484
    
    
    
    990,169Supplier advances
    
    
    79,792
    
    
    
    62,205Rent deposits
    
    
    360,639
    
    
    
    539,532Other advances and deposits
    
    
    70,285
    
    
    
    91,650Loans to employees
    
    
    105,187
    
    
    
    61,670Accrued interest
    
    
    839,034
    
    
    
    3382,405,421
    
    
    
    1,745,564
 5. Property, Plant and Equipment
  As of March 31,2009
    
    
    2010US$
    
    
    US$Furniture and fixtures
    
    
    445,308
    
    
    
    495,834Computer equipment and software
    
    
    22,929,434
    
    
    
    27,167,102Office equipment
    
    
    331,272
    
    
    
    396,262Vehicles
    
    
    265,128
    
    
    
    251,549Leasehold improvements
    
    
    409,692
    
    
    
    442,370Website development costs
    
    
    1,249,529
    
    
    
    2,399,218Property, plant and equipment  at cost
    
    
    25,630,363
    
    
    
    31,152,335Less: Accumulated depreciation and amortization
    
    
    (18,959,762
    )
    
    
    (26,401,257
    )6,670,601
    
    
    
    4,751,078Capital work-in-progress (net of impairment)
    
    
    1,255,206
    
    
    
    738,683Property, plant and equipment  net
    
    
    7,925,807
    
    
    
    5,489,761
    F-18




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##### Table of Contents



6. Investments in equity method investees
 Investments in equity interest
 The Companys investments in equity method investees interest were as follows:
 Percent of ownershipof equity sharesTachyon Technology Private Limited
    
    
    26
    %Eterno Infotech Private Limited
    
    
    44
    %Imere Technology Private Limited
    
    
    44
    %Bigslick Infotech Private Limited
    
    
    37
    %
 The following table presents investee companies financial information,
 As of March 31,2009
    
    
    2010US$
    
    
    US$Current assets
    
    
    1,737,072
    
    
    
    1,160,252Non-current assets
    
    
    179,289
    
    
    
    208,226Current liabilities
    
    
    346,288
    
    
    
    352,667Non-current liabilities
    
    
    49,195
    
    
    
    Loss from operations
    
    
    1,076,733
    
    
    
    1,036,870Loss attributable to Rediff
    
    
    133,209
    
    
    
    423,099
  Carrying value of equity method investments
    
    
    1,873,672Proportionate share of net assets of equity method investments
    
    
    397,233Excess of carrying value of investment over proportionate share of net assets
    
    
    1,476,439The excess carrying value has been primarily assigned to:Goodwill
    
    
    307,271Amortizable intangible assets
    
    
    1,169,168Total
    
    
    1,476,439
    F-19




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##### Table of Contents



7. Goodwill
   2009
    
    
    2010US$
    
    
    US$Balance as at beginning of the year
    
    
    7,314,468
    
    
    
    2,000,000Impairment loss
    
    
    5,314,468
    
    
    
    Balance as at end of the year
    
    
    2,000,000
    
    
    
    2,000,000
    8. Other non-current assets comprise
 As of March 31,2009
    
    
    2010US$
    
    
    US$Promissory notes (including accrued interest)
    
    
    400,000
    
    
    
    2,166,919Prepaid expenses
    
    
    159,389
    
    
    
    189,717Rent deposits
    
    
    457,998
    
    
    
    280,990Loans to employees
    
    
    67,679
    
    
    
    34,513Other advances and deposits
    
    
    148,315
    
    
    
    145,716Total
    
    
    1,233,381
    
    
    
    2,817,855
    F-20




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##### Table of Contents



9. Accounts payable and accrued liabilities
  As of March 31,2009
    
    
    2010US$
    
    
    US$Accounts payable
    
    
    1,165,833
    
    
    
    1,040,123Accrued expenses
    
    
    2,149,346
    
    
    
    3,285,436Taxes payable
    
    
    907,592
    
    
    
    916,286Staff incentive payable
    
    
    857,072
    
    
    
    885,860Other staff payables
    
    
    505,539
    
    
    
    584,918Other current liabilities
    
    
    73,074
    
    
    
    82,368Total
    
    
    5,658,456
    
    
    
    6,794,991
 10. Other non-current liabilities
  As of March 31,2009
    
    
    2010US$
    
    
    US$Unearned revenues
    
    
    337,180
    
    
    
    325,676Retirement benefits
    
    
    268,451
    
    
    
    323,550Other liabilities
    
    
    71,692
    
    
    
    124,335Total
    
    
    677,323
    
    
    
    773,561
 11. Shareholders equity
 Treasury shares
  12. Sales and marketing
  13. Miscellaneous income
   F-21




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##### Table of Contents



14. Related party transactions
  Repurchase of equity shares
  Advertising and Mobile Revenues
  Product Development Expenses
   Purchase of Convertible Promissory Note
   As of March 31,2009
    
    
    2010US$
    
    
    US$Account receivable for advertising revenues
    
    
    
    
    
    
    154,852Convertible promissory notes and accrued interest thereon
    
    
    
    
    
    
    1,316,919
  F-22




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##### Table of Contents



15. Retirement Benefits
 Gratuity
   2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Change in benefit obligationBenefit obligation at the beginning of the year
    
    
    198,777
    
    
    
    286,524
    
    
    
    288,136Actuarial loss (gain)
    
    
    12,708
    
    
    
    9,659
    
    
    
    (19,112
    )Service cost
    
    
    53,468
    
    
    
    60,933
    
    
    
    63,183Interest cost
    
    
    20,639
    
    
    
    28,214
    
    
    
    32,683Benefits paid
    
    
    (17,504
    )
    
    
    (27,888
    )
    
    
    (53,452
    )Effect of exchange rate changes
    
    
    18,436
    
    
    
    (69,306
    )
    
    
    38,186Benefit obligation at the end of the year
    
    
    286,524
    
    
    
    288,136
    
    
    
    349,624
   2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Service cost
    
    
    53,468
    
    
    
    60,933
    
    
    
    63,183Interest cost
    
    
    20,639
    
    
    
    28,214
    
    
    
    32,683Recognized net actuarial loss (gain)
    
    
    12,708
    
    
    
    9,659
    
    
    
    (19,112
    )Net gratuity cost
    
    
    86,815
    
    
    
    98,806
    
    
    
    76,754
  2008
    
    
    2009
    
    
    2010Discount rate
    
9.25%
    
    
9.00%
    
    
    9.10%Rate of increase in compensation
    
    10% for first 4 years and 7% thereafter
    
    
    10% for first 3 years and 7% thereafter
    
    
    10% for first 2 years and 7% thereafter
  Provident Fund
   F-23




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##### Table of Contents



16. Income Taxes
  2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$- Domestic
    
    
    2,371,338
    
    
    
    (5,885,632
    )
    
    
    (6,622,537
    )- Foreign
    
    
    2,970,268
    
    
    
    (5,199,289
    )
    
    
    (952,846
    )Income (loss) before income
taxes and equity in net
earnings of affiliates
    
    
    5,341,606
    
    
    
    (11,084,921
    )
    
    
    (7,575,383
    )
  2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Current taxes- Domestic
    
    
    388,364
    
    
    
    
    
    
    
    - Foreign
    
    
    45,010
    
    
    
    40,000
    
    
    
    30,000Net income tax expense
    
    
    433,374
    
    
    
    40,000
    
    
    
    30,000
  2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Income (loss) before income taxes and equity in net
earnings of affiliates
    
    
    5,341,606
    
    
    
    (11,084,921
    )
    
    
    (7,575,383
    )Indian statutory income tax rate
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.99
    %Expected income tax expense (benefit)
    
    
    1,815,612
    
    
    
    (3,767,765
    )
    
    
    (2,574,873
    )Tax effect of:-Adjustments to reconcile expected income tax expense
to reported income tax expenseEmployee stock-based compensation
    
    
    638,221
    
    
    
    395,857
    
    
    
    283,210Goodwill impairment
    
    
    
    
    
    
    1,806,229
    
    
    
    Change in valuation allowance
    
    
    (415,016
    )
    
    
    1,545,471
    
    
    
    2,401,938Gain on sale of investment taxed at capital gains rate
    
    
    (663,050
    )
    
    
    
    
    
    
    Tax in foreign jurisdictions
    
    
    (964,584
    )
    
    
    1,010
    
    
    
    (149,127
    )Others
    
    
    22,191
    
    
    
    59,198
    
    
    
    68,852Income tax expense
    
    
    433,374
    
    
    
    40,000
    
    
    
    30,000
  F-24




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##### Table of Contents



As of March 31,2009
    
    
    2010US$
    
    
    US$Deferred tax assets:Net operating loss carry forwards
    
    
    6,108,274
    
    
    
    4,949,739Depreciation and amortization
    
    
    2,026,113
    
    
    
    2,540,424Allowances for doubtful accounts
receivables
    
    
    1,368,545
    
    
    
    1,442,226Retirement benefits
    
    
    194,588
    
    
    
    246,003Minimum alternate tax credit
    
    
    336,016
    
    
    
    379,265Others
    
    
    125,755
    
    
    
    250,839Gross deferred tax assets
    
    
    10,159,291
    
    
    
    9,808,496Valuation allowance
    
    
    (10,159,291
    )
    
    
    (9,808,496
    )Net deferred tax assets
    
    
    
    
    
    
    
  As of March 31,2009
    
    
    2010US$
    
    
    US$Balance as at beginning of the year
    
    
    12,342,954
    
    
    
    10,159,291Change during the year
    
    
    1,545,471
    
    
    
    2,401,938Expired net operating carry forward losses
    
    
    (1,855,526
    )
    
    
    (1,992,770
    )Utilized net operating carry forward losses
and unabsorbed depreciation
    
    
    
    
    
    
    (1,605,864
    )Reduction on
account of unrecognized tax benefit
    
    
    (43,960
    )
    
    
    28,443Effect of currency translation
    
    
    (1,829,648
    )
    
    
    817,458Balance as at end of the year
    
    
    10,159,291
    
    
    
    9,808,496
       F-25




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##### Table of Contents



2009
    
    
    2010US$
    
    
    US$Unrecognized tax benefits balance at beginning of the year
    
    
    
    
    
    
    43,960Gross increase for tax positions of prior years
    
    
    43,960
    
    
    
    Gross decrease for tax positions of prior years
    
    
    
    
    
    
    (28,443
    )Effect of currency translation
    
    
    
    
    
    
    5,658Unrecognized tax benefits balance at end of the year
    
    
    43,960
    
    
    
    21,175
  17. Segments
   (i)
    
    India Online business primarily includes revenues from online
advertising and fee-based services. Online advertising includes
revenues mainly from display and performance based advertising and to
a lesser extent from sponsorships. Fee-based services include revenues
from online shopping, subscription services and mobile value-added
services.
 (ii)
    
    US Publishing business primarily includes revenues from the Rediff
India Abroad website and revenues from the print newspapers, India
Abroad and India in New York.
  2008
    
    
    2009
    
    
    2010India
    
    
    US
    
    
    
    
    
    
    India
    
    
    US
    
    
    
    
    
    
    India
    
    
    USOnline
    
    
    Publishing
    
    
    
    
    
    
    Online
    
    
    Publishing
    
    
    
    
    
    
    Online
    
    
    PublishingBusiness
    
    
    Business
    
    
    Total
    
    
    Business
    
    
    Business
    
    
    Total
    
    
    Business
    
    
    Business
    
    
    TotalUS$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$Revenues from
external customers:Advertising
    
    
    17,397,492
    
    
    
    8,012,081
    
    
    
    25,409,573
    
    
    
    14,053,368
    
    
    
    5,277,561
    
    
    
    19,330,929
    
    
    
    10,624,932
    
    
    
    3,751,818
    
    
    
    14,376,750Fee based services
    
    
    6,251,871
    
    
    
    587,759
    
    
    
    6,839,630
    
    
    
    5,654,013
    
    
    
    445,010
    
    
    
    6,099,023
    
    
    
    4,069,644
    
    
    
    396,867
    
    
    
    4,466,511Total revenues
    
    
    23,649,363
    
    
    
    8,599,840
    
    
    
    32,249,203
    
    
    
    19,707,381
    
    
    
    5,722,571
    
    
    
    25,429,952
    
    
    
    14,694,576
    
    
    
    4,148,685
    
    
    
    18,843,261Cost of revenues (excluding
depreciation and
amortization)
    
    
    6,660,616
    
    
    
    3,038,119
    
    
    
    9,698,735
    
    
    
    7,511,179
    
    
    
    2,864,552
    
    
    
    10,375,731
    
    
    
    7,654,344
    
    
    
    2,460,959
    
    
    
    10,115,303Segment Results
    
    
    16,988,747
    
    
    
    5,561,721
    
    
    
    22,550,468
    
    
    
    12,196,202
    
    
    
    2,858,019
    
    
    
    15,054,221
    
    
    
    7,040,232
    
    
    
    1,687,726
    
    
    
    8,727,958Segment Assets
    
    
    87,910,450
    
    
    
    12,835,672
    
    
    
    100,746,122
    
    
    
    62,340,933
    
    
    
    7,449,390
    
    
    
    69,790,323
    
    
    
    61,574,823
    
    
    
    5,986,629
    
    
    
    67,561,452Capital
expenditures
    
    
    10,332,440
    
    
    
    
    
    
    
    10,332,440
    
    
    
    5,072,485
    
    
    
    
    
    
    
    5,072,485
    
    
    
    1,755,917
    
    
    
    6,989
    
    
    
    1,762,906
  F-26




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##### Table of Contents



2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Segment result
    
    
    22,550,468
    
    
    
    15,054,221
    
    
    
    8,727,958Inter segment revenue
    
    
    
    
    
    
    
    
    
    
    Operating expenses
(including depreciation
and amortization)
    
    
    (24,669,335
    )
    
    
    (25,274,894
    )
    
    
    (20,301,925
    )Goodwill impairment
    
    
    
    
    
    
    (5,314,468
    )
    
    
    Other income
    
    
    7,460,473
    
    
    
    4,450,220
    
    
    
    3,998,584Net income (loss) before
income taxes and equity
in net earnings of equity
method investees
    
    
    5,341,606
    
    
    
    (11,084,921
    )
    
    
    (7,575,383
    )
  As at March 31,2009
    
    
    2010US$
    
    
    US$India Online business
    
    
    62,340,933
    
    
    
    61,574,823US Publishing business
    
    
    7,449,390
    
    
    
    5,986,629Total segment assets
    
    
    69,790,323
    
    
    
    67,561,452Investments in equity method investees
    
    
    1,740,457
    
    
    
    1,873,673Rediff.com India Employee trust
    
    
    
    
    
    
    24,920Phone card business
    
    
    80,843
    
    
    
    80,843Total assets
    
    
    71,611,623
    
    
    
    69,540,888
   F-27




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##### Table of Contents



Years ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$United States and Canada
    
    
    8,003,947
    
    
    
    5,292,299
    
    
    
    3,964,579India
    
    
    23,865,583
    
    
    
    19,664,404
    
    
    
    14,584,991Rest of the world
    
    
    379,673
    
    
    
    473,249
    
    
    
    293,691Total revenues
    
    
    32,249,203
    
    
    
    25,429,952
    
    
    
    18,843,261
   As of March 31,2009
    
    
    2010US$
    
    
    US$United States and Canada
    
    
    2,085,804
    
    
    
    2,028,856India
    
    
    7,840,003
    
    
    
    5,460,905Total
    
    
    9,925,807
    
    
    
    7,489,761
 18. Concentration of credit risk
     19. Stock-based compensation
 1999 Stock Option Plans
   F-28




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##### Table of Contents



WeightedNumber of
    
    
    Weighted
    
    
    averageoptions (in
    
    
    average
    
    
    remainingterms of
    
    
    exercise
    
    
    contractual
    
    
    AggregateOptions
    
    shares)
    
    
    price
    
    
    term (year)
    
    
    intrinsic valueUS$
    
    
    
    
    
    
    US$Outstanding as at April 1, 2009
    
    
    28,000
    
    
    
    9.81Expired
    
    
    (28,000
    )
    
    
    9.81Outstanding as at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable as at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  WeightedNumber of
    
    
    Weighted
    
    
    averageoptions (in
    
    
    average
    
    
    remainingterms of
    
    
    exercise
    
    
    contractual
    
    
    AggregateOptions
    
    shares)
    
    
    price
    
    
    term (year)
    
    
    intrinsic valueUS$
    
    
    
    
    
    
    US$Outstanding as at April 1, 2009
    
    
    6,000
    
    
    
    12.93Expired
    
    
    (6,000
    )
    
    
    12.93Outstanding as at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable as at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   F-29




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##### Table of Contents



2002 Stock Option Plan
    WeightedNumber of
    
    
    Weighted
    
    
    averageOptions (in
    
    

    average
    
    
    remainingterms of
    
    
    exercise
    
    
    contractual
    
    
    AggregateOptions
    
    shares)
    
    
    price
    
    
    term (year)
    
    

intrinsic valueUS$
    
    
    
    
    
    
    US$Outstanding as at April 1, 2009
    
    
    62,375
    
    
    
    4.91Forfeited
    
    
    
    
    
    
    Outstanding as at March 31, 2010
    
    
    62,375
    
    
    
    4.91
    
    
    
    3.1
    
    
    
    112,455Exercisable as at March 31, 2010
    
    
    62,375
    
    
    
    4.91
    
    
    
    3.1
    
    
    
    112,455
   2004 Stock Option Plan
    WeightedNumber of
    
    
    Weighted
    
    
    averageoptions (in
    
    
    average
    
    
    remainingterms of
    
    
    exercise
    
    
    contractual
    
    
    AggregateOptions
    
    shares)
    
    
    price
    
    
    term (year)
    
    

intrinsic valueUS$
    
    
    
    
    
    
    US$Outstanding as at April 1, 2009
    
    
    158,115
    
    
    
    13.14Granted
    
    
    105,500
    
    
    
    5.16Forfeited
    
    
    (15,625
    )
    
    
    5.86Outstanding as at March 31, 2010
    
    
    247,990
    
    
    
    10.20
    
    
    
    6.4
    
    
    
    5,430Exercisable as at March 31, 2010
    
    
    152,553
    
    
    
    12.79
    
    
    
    4.7
    
    
    
    
  F-30




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##### Table of Contents



2006 Stock Option Plan
    WeightedNumber of
    
    
    Weighted
    
    
    averageoptions (in
    
    
    average
    
    
    remainingterms of
    
    
    exercise
    
    
    contractual
    
    
    AggregateOptions
    
    shares)
    
    
    price
    
    
    term (year)
    
    
    intrinsic valueUS$
    
    
    
    
    
    
    US$Outstanding as at April 1, 2009
    
    
    199,963
    
    
    
    15.67Granted
    
    
    206,000
    
    
    
    5.17Forfeited
    
    
    (12,400
    )
    
    
    14.68Outstanding as at March 31, 2010
    
    
    393,563
    
    
    
    10.21
    
    
    
    8.0
    
    
    
    427,929Exercisable as at March 31, 2010
    
    
    144.488
    
    
    
    15.76
    
    
    
    6.5
    
    
    
    297,034
  F-31




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##### Table of Contents



Years ended March 31,2008
    
    
    
    2009
    
    
    
    2010Dividend yield
    
    
    0%
    
    
    
    0%
    
    
    
    0%Expected term
    
    
    3-5 years
    
    
    
    4 years
    
    
    
    7-9 yearsRisk free interest rates
    
    
    3.73%-3.97%
    
    
    
    2.43%
    
    
    
    2.83%-3.81%Volatility
    
    
    56.51%-69.42%
    
    
    
    57.95%
    
    
    
    70.87%-75.5%
   Year ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Cost of revenues
    
    
    242,882
    
    
    
    127,731
    
    
    
    102,635Sales and marketing
    
    
    904,374
    
    
    
    573,068
    
    
    
    327,758Product development
    
    
    321,778
    
    
    
    215,073
    
    
    
    213,337General and administrative
    
    
    406,974
    
    
    
    248,756
    
    
    
    189,484
 20. Earnings (loss) per share and ADS
  Year ended March 31,2008
    
    
    2009
    
    
    2010Net income (loss)
    
    US$
    4,908,232
    
    
    US$
    (11,258,130
    )
    
    US$
    (8,028,482
    )Weighted average equity shares for
basic earnings (loss) per share
    
    
    14,606,660
    
    
    
    14,615,800
    
    
    
    14,563,197Weighted average effect of dilutive
shares:Employee Stock Options
    
    
    166,164
    
    
    
    
    
    
    
    Weighted average equity shares for
diluted earnings per share
    
    
    14,772,824
    
    
    
    14,615,800
    
    
    
    14,563,197Earnings / (loss)
per share  basic
    
    
    0.336
    
    
    
    (0.770
    )
    
    
    (0.552
    ) diluted
    
    
    0.332
    
    
    
    (0.770
    )
    
    
    (0.552
    )Earnings / (loss)
per ADS   basic
    
    
    0.168
    
    
    
    (0.385
    )
    
    
    (0.276
    ) diluted
    
    
    0.166
    
    
    
    (0.385
    )
    
    
    (0.276
    )
  F-32




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##### Table of Contents



21. Dividends
  22. Allowance for doubtful trade accounts receivables
 Balance at
    
    
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Charged to cost
    
    
    Effect of exchange
    
    
    endDescription
    
    Period
    
    
    as expenses
    
    
    rate changes
    
    
    of periodUS$
    
    
    US$
    
    
    US$
    
    
    US$Fiscal 2010
    
    
    3,935,812
    
    
    
    (261,825
    )
    
    
    454,842
    
    
    
    4,128,829Fiscal 2009
    
    
    3,540,173
    
    
    
    1,238,400
    
    
    
    (842,761
    )
    
    
    3,935,812Fiscal 2008
    
    
    2,697,334
    
    
    
    848,111
    
    
    
    (5,272
    )
    
    
    3,540,173
 23. Fair value of financial instruments
    F-33




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##### Table of Contents



24. Commitments and contingencies
 Operating Leases
  Years ended March 31,2008
    
    
    2009
    
    
    2010US$
    
    
    US$
    
    
    US$Office premises
    
    
    759,589
    
    
    
    1,030,766
    
    
    
    594,523Residential apartments for employees
    
    
    246,889
    
    
    
    222,955
    
    
    
    118,717Total operating lease expense
    
    
    1,006,478
    
    
    
    1,253,721
    
    
    
    713,240
  As at March 31,
    
    US$2011
    
    
    321,1922012
    
    
    211,2312013
    
    
    199,6172014
    
    
    211,4502015
    
    
    217,794And there after
    
    
    734,128
  F-34




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##### Table of Contents



Litigation and Other Legal Matters
 Action Relating to Access to Pornographic Material
 Sunil N.
Phatarphekar & Ors. v. Abhinav Bhatt and Ors.
  Actions Relating to Trademark Infringement
   F-35




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##### Table of Contents



Actions Relating to Patent Infringement
 st th
    F-36




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##### Table of Contents



SIGNATURE
  REDIFF.COM INDIA LIMITEDBy:
    /s/ Ajit BalakrishnanName:
    Ajit BalakrishnanTitle:
    Chairman and Managing Director
(Principal Executive Officer)




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##### Table of Contents



SIGNATURE
  REDIFF.COM INDIA LIMITEDBy:
    /s/ Jayesh SanghrajkaName:
    Jayesh SanghrajkaTitle:
    Vice President Finance
(Principal Financial Officer)